Series: IMF Working Papers
Author(s): Jenny Ligthart
Publisher: INTERNATIONAL MONETARY FUND
Publication Date: 01 September 1998
Keywords: abatement, marginal cost of public funds, pollution taxation, public goods, Samuelson rule, second-best, public spending, environment, environmental quality, taxation
The paper studies the setting of optimal fiscal policy in a second-best world with environmental externalities. The optimal second-best pollution tax is shown to lie below the first-best Pigovian tax, particularly...