Pigou's Dividend Versus Ramsey's Dividend in the Double Dividend Literature

39 Pages Posted: 21 Feb 2006

See all articles by Miguel Rodríguez Méndez

Miguel Rodríguez Méndez

University of Vigo - Dept. Applied Economics

Eduardo L. Giménez

Universidade de Vigo

Date Written: June 2006

Abstract

This paper deals with the welfare analysis of green tax reforms. The aims of this paper are to highlight misinterpretations of policy assessments in the double dividend literature, to specify which of the efficiency costs and benefits should be ascribed to each dividend, and then, to propose a definition for the first dividend and the second dividend. We found the Pigou's dividend more appropriate for policy guidance, in contrast to the Ramsey's dividend usually found in mainstream literature. Therefore, we take up some authors' recent claims about the need of unambiguous and operative definitions of these dividends both for empirical purposes, and political advice. Finally, the paper analyzes a green tax reform for the US economy to illustrate the advantages of our definitions for policy assessment. The new definitions proposed in this paper i) overcome some shortcoming of the mainstream current definitions in the literature regarding overestimation of the efficiency costs; and, ii) provide information by themselves and not as a partial view of the whole picture.

Keywords: Double Dividend, Green Tax Reforms, Ramsey's Dividend, Pigou's Dividend

JEL Classification: H23, Q58

Suggested Citation

Rodríguez Méndez, Miguel and Giménez, Eduardo L., Pigou's Dividend Versus Ramsey's Dividend in the Double Dividend Literature (June 2006). FEEM Working Paper No. 85.2006, Available at SSRN: https://ssrn.com/abstract=885280 or http://dx.doi.org/10.2139/ssrn.885280

Miguel Rodríguez Méndez (Contact Author)

University of Vigo - Dept. Applied Economics ( email )

Facultade Empresariais e Turismo
Ourense, Ourense E-32004
Spain
+34 9 88368760 (Phone)
+34 9 8681 2401 (Fax)

HOME PAGE: http://webs.uvigo.es/miguel.r/

Eduardo L. Giménez

Universidade de Vigo ( email )

Facultade de C.C.Económicas e Empresariais
Universidade de Vigo
Vigo, Galicia E-36310
Spain
+34-986812400 (Phone)
+34-986812401 (Fax)

HOME PAGE: http://webs.uvigo.es/egimenez

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
125
Abstract Views
1,945
Rank
407,063
PlumX Metrics