Should the Carbon Price Be the Same in All Countries?

International differences in fuel taxation are huge, and may be justified by different local negative externalities that taxes must correct, as well as by different preferences for public spending. In this context, should a worldwide uniform carbon tax be added to these local taxes to correct the global warming externality? We address this question in a second best framework à la Ramsey, where public goods have to be financed through distortionary taxation and the cost of public funds has to be weighted against the utility of public goods. We show that when lump‐sum transfers between countries are allowed for, the second best tax on the polluting good may be decomposed into three parts: one, country‐specific, dealing with the local negative externality, a second one, country‐specific, dealing with the cost of levying public funds, and a third one, global, dealing with the global externality and which can be interpreted as the carbon price. Our main contribution is to show that the uniformity of the carbon price should still hold in this second best framework. Nevertheless, if lump‐sum transfers between governments are impossible to implement, international differentiation of the carbon price is the only way to take care of equity concerns.     

Sequencing,timing and filling rates of recruitment channels

This paper analyses the recruitment process by which employers adjust their search strategies. The focus is, in particular, on the sequence and timing of recruitment channels. Two search strategies are identified. One strategy is to advertise a vacancy, and to form a pool of candidates by activating subsequent recruitment channels such that candidates are added to the pool. An alternative strategy used by employers is to start searching via informal channels, consider applicants at arrival and continue their search along a new recruitment channel if no suitable candidates show up. Results suggest that when informal personal contacts are available to the employer, this ‘switching of channel’ strategy is preferred. Moreover, the results of this paper are consistent with the view that informal search methods are potentially more efficient than using an advertisement and forming a pool of applicants, in particular when vital positions in firms have to be filled.     

ON THE CONCEPT OF GREEN NATIONAL INCOME

The present paper generalizes the Weitzman/Hartwick approachto national income accounting. We first establish a close generalrelation between the current value Hamiltonian of an optimalcontrol problem and the optimal value of the objective integralif the time argument does not enter the constraints and entersthe objective function only as a discount factor. This resultis applied to a simple economic model covering most models foundin the literature on national income accounting involving pollutionand non-renewable resources. We critically review the usefulnessof net national product as a welfare indicator and as an indicatorfor sustainability.     

GROWTH,RENEWABLES, AND THE OPTIMAL CARBON TAX

Optimal climate policy is investigated in a Ramsey growth model of the global economy with exhaustible oil reserves, an infinitely elastic supply of renewables, stock‐dependent oil extraction costs, and convex climate damages. Four regimes can occur, depending on the initial social cost of oil being larger or smaller than that of renewables and depending on the initial oil stock being large or small. We also offer some policy simulations for the first and second regime, which illustrate that with a lower discount rate more oil is left in situ and renewables are phased in more quickly. We identify the conditions under which the optimal carbon tax rises or decreases. Subsidizing renewables (without a carbon tax) induces more oil to be left in situ and a quicker phasing in of renewables, but oil is depleted more rapidly initially. The net effect on global warming is ambiguous.