, a revenue-neutral pollution tax (or auctioned permits) can produce a substantial double dividend by reducing both … pollution and the costs of the tax system. The second dividend arises because the welfare gain from using environmental tax … environmental benefits), the overall costs of a revenue - neutral pollution tax are negative in the benchmark simulations, at least …

environmental ("carbon") tax on polluting production, as well as the effect of government spending on pollution abatement over the … cycle. In particular, a positive shock to pollution emission in the model works like a positive technological shock, but its … effect is quantitatively very small. Allowing for pollution as a by-product of production improves the model performance …