Does the Double Dividend of Environmental Tax Really Play a Role in OECD Countries? A Study Based on the Panel ARDL Model

Pinglin He, Xiaonan Zou, Ya Qiao, Lu Chen, Xin Wang, Xiaoyan Luo, Jing Ning

Ekoloji, 2019, Issue 107, Pages: 49-62, Article No: e107035

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Abstract

Based on the Panel ARDL model, this paper reports the economic and environmental performance of environmental tax levied in 36 countries of OECD from 1994 to 2014. According to the double dividend theory of environmental tax, the following six variables are selected to establish the Panel ARDL model: environmental tax, GDP, unemployment rate, greenhouse gas emissions, nitrogen oxides emissions and sulfur oxides emissions. After a series of econometric methods such as unit root test, cointegration test and Granger causality test, the conclusion is as followed. It is found that there is a long-term cointegration relationship between the environmental tax and the other five variables. We can also conclude that the environmental tax significantly reduces nitrogen oxides emissions in the long run, while it also significantly reduces sulfur oxides emissions in the short run, then from this perspective, the green dividend effect is obvious. But in fact, we cannot prove that environmental taxes have a significant positive effect on reducing greenhouse gas emissions. In addition, we have confirmed that for 36 countries of OECD, environmental taxes can achieve the blue dividend of economic growth, but there is no evidence that environmental taxes have a positive effect on reducing unemployment.

Keywords

panel-ARDL, environmental tax, double dividend, OECD countries

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