Recent research on Carbon Taxes and Cap and Trade

Before the May announcement of Ontario’s Climate Change Mitigation and Low-carbon Economy Act ,   a working paper released in April by the Institute for Competitiveness and Prosperity at the University of Toronto models the impact of Ontario’s proposed cap-and-trade program on economic growth and greenhouse gas emissions, considers complementary policies that reduce greenhouse gas emissions , and makes ten recommendations.  Read  Towards a low Carbon Economy: The Costs and Benefits of Cap and Trade here  .   The Effect of Environmental Policies on Jobs: Painting a More Complete Picture   explains a new general equilibrium model, developed by economists at Resources for the Future,  which incorporates a job search requirement in the model.   The subsequent Discussion Paper, Unemployment and Environmental Regulation in General Equilibrium  concludes that “a modest economy-wide carbon tax would likely cause a substantial shift in employment between industries, but would have little overall effect on unemployment, even in the short run…An environmental performance standard causes a substantially smaller sectoral shift in employment than the emissions tax, with roughly similar net effects.”

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