The Present Value Criterion and Environmental Taxation: The Suboptimality of First-Best Decision Rules
在气候变化与经济增长的动态模型中，分析环境税与扭曲性税收的关联，发现最优条件下应征收现值边际成本的碳税，但次优条件下该规则会低估最优税率，而一次性返还收入时低税率更合理。
<i>This paper examines the links between environmental taxes and distortionary taxation in a dynamic model of climate change and economic growth. Under first-best conditions, labor and capital would remain untaxed, and carbon dioxide emissions would be taxed at a rate equal to the present-value marginal cost they impose on future society, setting the discount rate equal to the marginal productivity of capital. Under second-best conditions, however, this decision rule substantially understates optimal emissions taxes when the resulting revenues are used to provide targeted cuts in distortionary taxes. Conversely, relatively low emissions taxes are economically justified given lump-sum revenue recycling.</i>