Testing Double Dividend Hypothesis for OECD Economies: A Panel Cointegration and Causality Analysis
Journal Title: The Journal of International Scientific Researches - Year 2017, Vol 2, Issue 4
Abstract
Environmental tax reforms have become more popular in recent years. The main reason for this situation is concern about global warming and climate change. Also, another problem that most countries have faced is the high level of unemployment. It has been known that environmental taxes are an efficient fiscal instrument to decrease environmental pollution for many years. On the other hand, double-dividend hypothesis that has entered the public finance literature in the recent time claims two benefits of environmental taxes. In addition to lowering environmental pollution, it also enhances employment level. The aim of this paper is to test whether this claim is valid, using panel cointegration and causality analyses for OECD countries from the 1994-2013 period. According to Panel VECM causality analysis results, it has only causality relationship from environmental taxes to environmental pollution in the short run in OECD economies while there are causality relationship from environmental taxes to environmental pollution and unemployment level in the long run. On the other hand, panel FMOLS cointegration results show that environmental taxes decrease both environmental pollution and unemployment level in OECD economies. Finally, country specific results found that double-dividend hypothesis is valid for 14 OECD economies.
Authors and Affiliations
M. Hanefi Topal
Keywords
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- EP ID EP169741
- DOI 10.23834/isrjournal.285627
- Views 124
- Downloads 0
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