Environmental tax reform boosts long-term growth and welfare, but short-term impact negative.
The study looked at how changing environmental taxes can affect the economy in the short and long term. By using a model that focuses on how people's skills grow over time, the researchers found that only certain types of environmental tax reforms can help the economy grow and improve people's well-being in the long run. Specifically, when the money from environmental taxes is used to lower wage taxes and increase public spending, the economy does better in the long term. However, in the short term, the effects are not as positive.