| Abstract: |
This paper deals with the welfare analysis of green tax reforms. The aims of
this paper are to highlight misinterpretations of policy assessments in the
double dividend literature, to specify which of the efficiency costs and
benefits should be ascribed to each dividend, and then, to propose a
definition for the first dividend and the second dividend. We found the
Pigou’s dividend more appropriate for policy guidance, in contrast to the
Ramsey’s dividend usually found in mainstream literature. Therefore, we take
up some authors’ recent claims about the need of unambiguous and operative
definitions of these dividends both for empirical purposes, and political
advice. Finally, the paper analyzes a green tax reform for the US economy to
illustrate the advantages of our definitions for policy assessment. The new
definitions proposed in this paper i) overcome some shortcoming of the
mainstream current definitions in the literature regarding overestimation of
the efficiency costs; and, ii) provide information by themselves and not as a
partial view of the whole picture. |