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Environmental taxes, reforms and economic growth: An empirical analysis of panel data

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  • Mahmoud Hassan

    (SMART-LERECO - Structures et Marché Agricoles, Ressources et Territoires - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - INSTITUT AGRO Agrocampus Ouest - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement)

  • Walid Oueslati

    (SMART-LERECO - Structures et Marché Agricoles, Ressources et Territoires - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - INSTITUT AGRO Agrocampus Ouest - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement)

  • Damien Rousselière

    (SMART-LERECO - Structures et Marché Agricoles, Ressources et Territoires - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - INSTITUT AGRO Agrocampus Ouest - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement)

Abstract

This paper explores the relationship between environmentally related taxes and economic growth rate. The analysis also investigates whether this relationship differs between countries which have implemented environmental tax reforms (ETRs) and ones which have not. Using panel data from 31 OECD countries over the period 1994 - 2013, the paper finds that when we allow environmentally related tax revenues to interact with an initial level of real GDP per capita, the overall revenues of these taxes are negatively associated with economic growth rate, in the short- and long- term. Furthermore, we show that the higher the initial level of GDP per capita, the more environmentally related tax revenues can promote economic growth rate. The analysis also reveals that the relationship between environmentally related tax revenues and economic growth varies between countries that have a mechanism to redistribute environmentally related tax revenues and those that do not have a mechanism.

Suggested Citation

  • Mahmoud Hassan & Walid Oueslati & Damien Rousselière, 2020. "Environmental taxes, reforms and economic growth: An empirical analysis of panel data," Post-Print hal-02503305, HAL.
    • Handle: RePEc:hal:journl:hal-02503305
    DOI: 10.1016/j.ecosys.2020.100806
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