GASOLINE TAX POLICY, CARBON EMISSIONS AND THE GLOBAL ENVIRONMENT

This paper shows the importance of a co-ordinated increase in the price of transport fuels if environmental threats such as a global warming are to be confronted. Gasoline demand elasticities in the OECD are analysed using various models. The elasticities from the preferred model, the lagged endogenous, are used to forecast gasoline consumption and carbon emissions under various assumptions about gasoline price and tax policy. The results show that if the whole OECD had taxes as high as in Italy, emissions could be reduced by more than 30 per cent in the year 2000, instead of increasing by almost 50 per cent if taxes remained unchanged. (Author/publisher).