This paper employs analytical and numerical general equilibrium models to examine the costs of achieving pollution reductions under a range of environmental policy instruments in a second-best setting with pre-existing factor taxes. We compare the costs and overall efficiency impacts of...

This paper employs analytical and numerical general equilibrium models to examine the costs of achieving pollution reductions under a range of environmental policy instruments in a second-best setting with pre-existing factor taxes. We compare the costs and overall efficiency impacts of...

This paper shows that the usual "excess-burden triangle" formula performs poorly when used to assess the excess burden from taxes on intermediate inputs or consumer goods, and derives a practical alternative to this formula. We use an analytically tractable general equilibrium model to reveal...

This paper employs analytical and numerical general equilibrium models to examine the optimal setting of environmental taxes in the presence of pre-existing distortionary taxes. Both models indicate, contrary to what several analysts have suggested, that the optimal environmental tax rate in...

This paper shows that under typical conditions the simple "excess-burden triangle" formula substantially underestimates the excess burden of commodity taxes. This formula performs poorly because it ignores general equilibrium interactions - most importantly, interactions between the market for...

This paper uses a dynamic computable general equilibrium model to compare, in an economy open to international capital flows, the effects of two U.S. policies intended to promote domestic capital formation. The two policies -- the introduction of an investment tax credit (ITC) and a reduction in...