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Bank of Italy: recessive carbon tax, revenue compensates for the effects

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Mps, Salvini

(ANSA) – ROME, JULY 31 – A European carbon tax would have recessive effects “which can be almost entirely offset by using the proceeds of the tax to increase subsidies to renewable sources and reduce the tax burden on labor”.

This is what we read in a research by the economists of the Bank of Italy (but the work does not necessarily reflect the opinion of the bank ed). The research hypothesizes that the increase in the carbon tax is gradual and announced by the authorities, and therefore anticipated by households and businesses. If the monetary policy rate is at its lower bound, analysts write, “the net recessive effects can be offset by reducing long-term interest rates through central bank purchases of sovereign bonds for monetary policy purposes.” (HANDLE).

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Source: Ansa

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