Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/309805 
Year of Publication: 
2023
Citation: 
[Journal:] International Tax and Public Finance [ISSN:] 1573-6970 [Publisher:] Springer US [Place:] New York, NY [Year:] 2023 [Pages:] 1-27
Publisher: 
Springer US, New York, NY
Abstract: 
Employing a two-period model with an environmental externality, this paper investigates the relation between emission taxation and the optimal level of public debt. The central insight is that the effect of emission taxation on optimal borrowing is ambiguous and may lead to lower or higher optimal debt. In the context of climate change, we even show that the counterintuitive result of a higher optimal debt level is likely in the short-run and possibly also in the long-run, a result that provides a novel rationale for public borrowing. Our basic arguments turn out to be robust against several generalization.
Subjects: 
Adaptation
Environmental externality
Public debt
Climate policy
Tax smoothing
JEL: 
H23
H63
Q54
Q58
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article
Document Version: 
Published Version

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