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Lecca P.,University of Strathclyde | Lecca P.,Strathclyde International Public Policy Institute | Lecca P.,Scottish Center for Constitutional Change | Mcgregor P.G.,University of Strathclyde | And 6 more authors.
Journal of Regional Science

This paper explores the impact on aggregate economic activity in a small, open region of an income tax funded expansion in public consumption that has no direct supply-side effects. The conventional balanced budget multiplier produces an unambiguously positive macroeconomic stimulus, but the incorporation of negative competitiveness elements, through the operation of the local labor market, renders this positive outcome less certain. Simulation using a single-region Computable General Equilibrium (CGE) model for Scotland demonstrates that the creation of local amenity effects, and the extent to which these are incorporated into local wage bargaining, is central to the analysis. © 2014 Wiley Periodicals, Inc. Source

Allan G.,University of Strathclyde | Allan G.,Strathclyde International Public Policy Institute | Lecca P.,University of Strathclyde | Lecca P.,Strathclyde International Public Policy Institute | And 7 more authors.
Ecological Economics

Using a disaggregated energy-economy-environmental model, we investigate the economic and environmental impact of a Scottish specific carbon tax under three alternative assumptions about the use of the revenue raised by the tax: revenues raised are not recycled within Scotland; revenues are used to increase general government expenditure or to reduce Scottish income tax. We find that by imposing a tax of £50 per tonne of CO2 the 37% CO2 reduction target is met with a very rapid adjustment in all three cases if the model incorporates forward-looking behaviour. However, the adjustment is much slower if agents are myopic. In addition, the results of the model suggest that a carbon tax might simultaneously stimulate economic activity whilst reducing emissions and thus secure a double dividend, but only for the case in which the revenue is recycled through income tax. © 2014 Elsevier B.V. Source

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