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Exploring the link between energy based taxes and economic growth

Author

Listed:
  • Mahmoud Hassan

    (AGROCAMPUS OUEST, UMR SMART-LERECO)

  • Walid Oueslati

    (AGROCAMPUS OUEST, UMR SMART-LERECO)

  • Damien Rousselière

    (AGROCAMPUS OUEST, UMR SMART-LERECO
    Université du Québec à Montréal)

Abstract

This paper provides empirical evidence regarding the effect of energy based taxes on economic growth. The analysis is based on a panel dataset of 31 OECD (Organisation for Economic Co-operation and Development) member countries from 1994 to 2013, using multiple imputation algorithm to address missingness pattern. Employing the instrumental variables with two-stage least squares instrumental variable estimator, we found that energy based taxes have a negative effect on economic growth rate. This effect may rely significantly on the level of the economy’s dependence on polluting energy use as a share of total energy used in the production process. In addition, our study shows that an increase in energy based taxes can enhance significantly the economic growth rate, as the initial level of country’s richness increases.

Suggested Citation

  • Mahmoud Hassan & Walid Oueslati & Damien Rousselière, 2020. "Exploring the link between energy based taxes and economic growth," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 22(1), pages 67-87, January.
    • Handle: RePEc:spr:envpol:v:22:y:2020:i:1:d:10.1007_s10018-019-00247-5
    DOI: 10.1007/s10018-019-00247-5
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    More about this item

    Keywords

    Environmental tax; Economic growth; Instrumental variables with two-stage least squares IV (2SLS) approach; Multiple imputation;
    All these keywords.

    JEL classification:

    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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