01720cas a2200241 a 4500 AALejournalIMF000725 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451856613 1018-5941 BD-DhAAL BD-DhAAL Ligthart, Jenny. Optimal Fiscal Policy and the Environment / Jenny Ligthart. Washington, D.C. : International Monetary Fund, 1998. 1 online resource (28 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students 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 if substitution between labor and polluting intermediate inputs is easy, the labor supply curve is more elastic, and preexisting taxes are large. The optimal level of public abatement is derived from the modified Samuelson rule and is larger if society cares more for the environment, public funds are inexpensive, and public abatement is relatively productive. The analysis also shows that the Samuelson rule should be revised if allowance is made for nonseparabilities in preferences. Mode of access: Internet IMF Working Papers; Working Paper ; No. 1998/146 Full text available on IMF http://elibrary.imf.org/view/journals/001/1998/146/001.1998.issue-146-en.xml IMF e-Library