Many environmental policies including the Kyoto Protocol, the Acid Rain Program, the Montreal Protocol and the phase-out of leaded gas are designed to achieve a target level of abatement within a specified period of time. This paper examines how pollution abatement should be allocated over time...

Pollution externalities between polluters should be taken into account in the design of optimal Pigouvian tax. When the externalities are substantial and/or the number of polluters is large, the effluent levies on these firms do not necessarily result in a deadweight loss. Rather, the tax can...

This paper studies optimal second-best corrective regulation, when some agents/activities cannot be perfectly regulated. We show that policy elasticities and Pigouvian wedges are sufficient statistics to characterize the marginal welfare impact of regulatory policies in a large class of...

This paper studies optimal second-best corrective regulation, when some agents/activities cannot be perfectly regulated. We show that policy elasticities and Pigouvian wedges are sufficient statistics to characterize the marginal welfare impact of regulatory policies in a large class of...

We study the implications of climate change and the associated mitigation measures for optimal monetary policy in a canonical New Keynesian model with climate externalities. Provided they are set at their socially optimal level, carbon taxes pose no trade-offs for monetary policy: it is both...