Publication:
The Effect of Carbon Taxes on Aggregate Productivity: The Case of the Dominican Republic

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dc.contributor.authorFerro, Esteban
dc.contributor.authorMare, Davide S
dc.contributor.authorMiguel Liriano, Faruk
dc.contributor.authorPatiño Peña, Fausto
dc.contributor.authorRodriguez Quezada, Maria Gabriela
dc.contributor.authorZeni, Federica
dc.date.accessioned2024-10-15T19:38:59Z
dc.date.available2024-10-15T19:38:59Z
dc.date.issued2024-10-15
dc.description.abstractThis paper examines the impact of implementing a carbon tax on aggregate total factor productivity in the Dominican Republic through the resource allocation channel. It incorporates energy inputs—electricity and fuel—into firms’ production functions, allowing predictions of potential changes in resource allocation due to the carbon tax. The theoretical implications of the model indicate that the carbon tax has a heterogeneous effect on firms’ input choices, contingent on the level of firms’ existing input market distortions. Moreover, the model suggests that in economies in which more productive firms are less distorted, the carbon tax can decrease aggregate total factor productivity. In contrast, when more productive firms are more distorted, the carbon tax can increase or decrease aggregate total factor productivity. Utilizing detailed firm-level data from 2009 to 2018, covering up to 118,000 firms, this paper finds that a carbon tax is more effective when levied on fuels rather than electricity. For the majority of sectors in the sample, the paper finds that existing distortions in energy consumption are positively correlated with firm-level productivity. Moreover, the quantitative results show that the introduction of the carbon tax shifts the burden of market distortions from high productivity firms to low productivity ones, generating aggregate total factor productivity gains for most sectors in the Dominican Republic. Overall, this study underscores the importance of considering existing input market distortions when analyzing the impact of environmental taxes.en
dc.identifierhttp://documents.worldbank.org/curated/en/099342410042420382/IDU195b3218e1262d1451c1abee16072cafe6017
dc.identifier.doi10.1596/1813-9450-10944
dc.identifier.urihttps://hdl.handle.net/10986/42250
dc.languageEnglish
dc.language.isoen_US
dc.publisherWashington, DC: World Bank
dc.relation.ispartofseriesPolicy Research Working Paper; 10944
dc.rightsCC BY 3.0 IGO
dc.rights.holderWorld Bank
dc.rights.urihttps://creativecommons.org/licenses/by/3.0/igo/
dc.subjectCLIMATE CHANGE
dc.subjectCARBON PRICING
dc.subjectMISALLOCATION
dc.subjectTFP
dc.subjectTOTAL FACTOR PRODUCTIVITY
dc.subjectDECENT WORK AND ECONOMIC GROWTH
dc.subjectSDG 8
dc.subjectCLIMATE ACTION
dc.subjectSDG 13
dc.subjectPEACE, JUSTICE AND STRONG INSTITUTIONS
dc.subjectSDG 16
dc.titleThe Effect of Carbon Taxes on Aggregate Productivityen
dc.title.subtitleThe Case of the Dominican Republicen
dc.typeWorking Paper
dspace.entity.typePublication
okr.crossref.titleThe Effect of Carbon Taxes on Aggregate Productivity: The Case of the Dominican Republic
okr.date.disclosure2024-10-15
okr.date.lastmodified2024-10-04T00:00:00Zen
okr.doctypePolicy Research Working Paper
okr.doctypePublications & Research
okr.docurlhttp://documents.worldbank.org/curated/en/099342410042420382/IDU195b3218e1262d1451c1abee16072cafe6017
okr.guid099342410042420382
okr.identifier.docmidIDU-95b3218e-262d-451c-abee-6072cafe6017
okr.identifier.doi10.1596/1813-9450-10944
okr.identifier.doihttps://doi.org/10.1596/1813-9450-10944
okr.identifier.externaldocumentum34400144
okr.identifier.internaldocumentum34400144
okr.identifier.reportWPS10944
okr.import.id5466
okr.importedtrueen
okr.language.supporteden
okr.pdfurlhttp://documents.worldbank.org/curated/en/099342410042420382/pdf/IDU195b3218e1262d1451c1abee16072cafe6017.pdfen
okr.region.administrativeLatin America & Caribbean
okr.region.countryDominican Republic
okr.sectorOther Public Administration
okr.topicEnvironment::Adaptation to Climate Change
okr.topicEnvironment::Environmental Economics & Policies
okr.topicEnergy::Energy and Economic Development
okr.topicMacroeconomics and Economic Growth::Taxation & Subsidies
okr.unitEFI-LCR-Regional Director (ELCDR)
okr.unitDECRG: Finance & Priv Sec Devt (DECFP)
okr.unitEnterprise Analysis-IFC (DECEA)
okr.unitEFI-LCR-MTI-MacroFiscal (ELCMU)
relation.isSeriesOfPublication26e071dc-b0bf-409c-b982-df2970295c87
relation.isSeriesOfPublication.latestForDiscovery26e071dc-b0bf-409c-b982-df2970295c87
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