that the efficient solution can be implemented combining a tax on emissions and a subsidy on clean output. The tax is lower … than the environmental damages, and the subsidy is equal to the difference between the price and the marginal revenue. In … the second part of the paper, the second-best tax and subsidy are also calculated solving a two-stage policy game between …

uncertainty by adopting abatement technology to reduce pollution. Further analyses suggest that polluting firms are more likely to …

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 …

"environmental" output tax levied on the polluting firm's output, 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 …, but less so along the environmental dimension, so more research is needed to understand the aggregate effects of pollution. …