Frequently, hope is expressed that a revenue-neutral ecological tax reform may serve as a remedy for both unemployment and pollution. The idea is to recycle the proceeds from green taxes by cutting taxes on labour, thus boosting employment while discouraging polluting activities. We investigate...

This paper analyses the medium-term effects of a carbon tax on growth and CO2 emissions in Ireland, a small open economy. We find that a double dividend exists if the carbon tax revenue is recycled through reduced income taxes. If the revenue is recycled by giving a lump-sum transfer to...