Title: Money illusion and the double dividend in the short run
Authors : Schleiniger, Reto
Published in : German Economic Review
Volume(Issue) : 6
Issue : 2
Pages : 249
Pages to: 254
Publisher / Ed. Institution : Wiley
Issue Date: 2005
License (according to publishing contract) : Licence according to publishing contract
Type of review: Peer review (publication)
Language : English
Subjects : Dividend; Illusion; Money; Double
Subject (DDC) : 330: Economics
Abstract: In their seminal paper, Bovenberg and de Mooij (1994) elucidate why an ecological tax reform will not yield a double dividend, i.e. fails to increase the efficiency of the tax system. The present paper slightly modifies the Bovenberg and de Mooij model by introducing money illusion. With this modification, an environmental tax reform that raises the price level may generate a double dividend, since the additional tax on the dirty good does not reduce labor supply. A prerequisite for the double dividend to occur is a sufficiently small elasticity of substitution between clean and dirty consumption. Moreover, accounting for money illusion always reduces the intertemporal gross cost of the tax reform.
Departement: School of Management and Law
Organisational Unit: Center for Energy and Environment (CEE)
Publication type: Article in scientific journal
DOI : 10.1111/j.1465-6485.2005.00129.x
ISSN: 1465-6485
URI: https://digitalcollection.zhaw.ch/handle/11475/9656
Appears in Collections:Publikationen School of Management and Law

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