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Political Science > Environmental Policy

You are looking at 1 - 9 of 9 items for :

  • Type: Journal Issue x
  • Fiscal Policy x
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Cover IMF Working Papers
Navigating Minefields and Headwinds: National Security, Demographic Shifts, Climate Change and Fiscal Policy in Lithuania
Serhan Cevik
Lithuania’s immediate fiscal challenges are national security and higher costs of borrowing, but fiscal prospects are further exacerbated by long-term pressures stemming from climate change and a shrinking and aging population. The country has experienced a rapidly decreasing population—from 3.7 million in 1991 to 2.8 million in 2023—and its old-age dependency ratio is consequently expected to increase from 33 percent in 2023 to 53.4 percent by 2050. The resulting long-term spending pressures are projected to amount to as much as 11.2 percent of GDP, which is about 30 percent of the current level of spending. Debt sustainability concerns would not allow financing additional spending with more debt. Hence, a comprehensive strategy will help address these long-term fiscal challenges, including tax policy changes to raise additional revenue while primarily reducing expenditure needs through pension and healthcare reforms.
Keywords:
Military spending; interest rates; climate change; demographics; pension; healthcare; tax policy; fiscal sustainability; Lithuania; debt sustainability concern; dependency ratio; headwinds national security; spending pressure; old-age dependency ratio; Aging; Pension spending; Global; Europe
Cover IMF Working Papers
Green Fiscal Rules? Challenges and Policy Alternatives
Francesca Caselli, Andresa Lagerborg, and Paulo A Medas
This paper studies the impact of green fiscal rules – designed to protect climate-related spending –on debt dynamics. Simulations of green rules that exempt green spending from the rule limits for an emergingmarket economy illustrate that they can lead to unsustainable debt dynamics when the net zero emissions goal is pursued mostly using spending-based instruments (e.g., investment and subsidies). Or the rule would need to implicitly assume a large fiscal adjustment in the non-green budget, which would undermine its credibility. It will be needed to build broad public consensus for a more comprehensive fiscal strategy that tackles the difficult policy tradeoffs that will be required and takes into account long-term effects. A more appropriate mix of climate policies, including actively employing carbon pricing, should be pursued within the overall setting of fiscal and debt objectives. Developing ‘green’ medium-term fiscal frameworks would help to integrate climate change considerations into fiscal policy design in a more comprehensive manner.
Keywords:
Fiscal rule; golden rule; medium-term fiscal framework; MTFF; Policy alternative; policy tradeoff; debt objective; PFM practice; green spending; Fiscal rules; Climate policy; Climate change; Natural disasters; Debt sustainability; Global
Cover IMF Staff Country Reports
Kingdom of the Netherlands–The Netherlands: 2024 Article IV Consultation-Press Release; and Staff Report
International Monetary Fund. European Dept.
The 2024 Article IV Consultation discusses that the economy has cooled, but signs of overheating remain in The Netherlands. After two years of strong recovery, growth decelerated in 2023, reflecting the energy shock, tighter financial conditions, and a slowdown in key trading partners, particularly Germany. Core inflation remains elevated, reflecting a tight labor market, robust wage growth, and healthy profit margins. Growth is expected to gradually regain momentum in 2024, driven by higher private consumption and external demand. High interest rates will weigh on business and residential investment. For 2024, given the high cost of underestimating inflation persistence, a non-expansionary stance is warranted; adjustment measures should be identified. Medium-term fiscal challenges call for structural reforms to stabilize debt. Climate mitigation strategies need to tackle implicit fuel subsidies, striking the right balance among regulation, pricing/feebates, and subsidies, while addressing distributional concerns and ensuring policy predictability.
Keywords:
government Finance statistics yearbook; IMF staff calculation; core inflation persistence; EMU aggregate; consultation cycle; Labor markets; Inflation; Labor shortages; Fiscal stance; Europe
Cover Fiscal Monitor, October 2023
Fiscal Monitor, October 2023
Climate Crossroads: Fiscal Policies in a Warming World
International Monetary Fund. Fiscal Affairs Dept.

Abstract

The report takes stock of mitigation policies across countries and presents the trilemma facing policymakers of balancing between achieving climate goals, debt sustainability, and political feasibility. New insights from the report shows that the only way to achieve these joint goals is through a carefully calibrated mix of revenue and spending-based policies. Carbon pricing is a necessary instrument and should be part of the policy mix. However, it is not sufficient and should be complemented by policies to address market failures and catalyze private financing and investment in low-carbon technologies. Robust fiscal transfers are needed to protect vulnerable households, workers, and communities during the green transition.

Keywords:
economy abbreviation; p LW; support disinflation effort; fiscal policy support; statistics manual; inflation expectation; Greenhouse gas emissions; Fiscal stance; Global; Caribbean; Asia and Pacific; Middle East; North Africa; East Africa
Cover IMF Working Papers
Monitoring the Climate Impact of Fiscal Policy - Lessons from Tracking the COVID-19 Response
Khaled Eltokhy, Ms. Katja Funke, Guohua Huang, Yujin Kim, and Genet Zinabou
In the wake of the COVID-19 crisis, governments around the world announced unprecedented fiscal packages to address the economic impact of the crisis. The unusually large scale of the packages was accompanied by widespread calls for “greening” them to meet the dual goals of economic recovery and environmental sustainability. In response, several researchers and international organizations attempted to assess the “greenness” of the fiscal policy response of the world’s largest economies. This paper takes stock of the contributions made by these various trackers, identifies strengths and weaknesses of their methodologies, and draws lessons for assessing the climate impact of fiscal policy going forward. It finds that: trackers provided useful assessments of the (generally low) level of greenness and raised awareness; trackers’ methodologies, while valid and innovative, varied significantly with some important, if currently largely unavoidable, weaknesses; and the way forward should involve tracking the greenness of entire government budgets, rather than just their response to the COVID-19 crisis.
Keywords:
Green fiscal policy tracker; green budgeting; COVID-19 response; climate impact assessment; IMF Green tracker policy archetype; climate impact; green fiscal policy tracker; climate relevance; fiscal policy response; Greenhouse gas emissions; Climate policy; Climate change; Environmental policy; Global; COVID-19
Cover IMF Working Papers
Macroeconomic and Financial Policies for Climate Change Mitigation: A Review of the Literature
Signe Krogstrup and William Oman
Climate change is one of the greatest challenges of this century. Mitigation requires a large-scale transition to a low-carbon economy. This paper provides an overview of the rapidly growing literature on the role of macroeconomic and financial policy tools in enabling this transition. The literature provides a menu of policy tools for mitigation. A key conclusion is that fiscal tools are first in line and central, but can and may need to be complemented by financial and monetary policy instruments. Some tools and policies raise unanswered questions about policy tool assignment and mandates, which we describe. The literature is scarce, however, on the most effective policy mix and the role of mitigation tools and goals in the overall policy framework.
Keywords:
WP; government failure; policy authorities; Policy tool; mitigation policy; monetary policy tool; Policy instrument; Keywords: climate change; fiscal policy; monetary policy; financial policy; policy framework; policy coordination; Policy mix; policy risk; climate policy gain; distributive policy risk; technology policy; adaptation policy; Climate change; Carbon tax; Climate policy; Greenhouse gas emissions; Public investment and public-private partnerships (PPP); Global
Cover Policy Papers
Fiscal Policies for Paris Climate Strategies—from Principle to Practice
International Monetary Fund. Fiscal Affairs Dept.
This paper discusses the role of, and provides practical country-level guidance on, fiscal policies for implementing climate strategies using a unique and transparent tool laying out trade-offs among policy options.
Keywords:
PP; fund; fiscal policy; policy; financing; country; policy option; fund surveillance; fiscal policy implication; IMF executive board review; contingency funds; macro policy; Carbon tax; Greenhouse gas emissions; Climate change; Non-renewable resources; Energy prices; Global; Africa; IMF's transparency policy
Cover IMF Staff Position Notes
Climate Policy and the Recovery
Mr. Michael Keen and Benjamin Jones
Negotiations toward a successor to the Kyoto Protocol on climate change have come to a critical point, and domestic climate policies are being developed, as the world seeks to recover from the deepest economic crisis for decades and looks for new sources of sustainable growth. This position paper considers the challenge posed by these two policy imperatives: how to exit from the crisis while developing an effective response to climate change. Blending the objectives of a sustained recovery and effective climate policies presents both challenges and opportunities. Although there are potential “win-win” spending measures conducive to both, the more fundamental linkages and synergies lie in the broader strategies adopted toward each other. Greater climate resilience can promote macroeconomic stability and alleviate poverty; and carbon pricing, essential for mitigation, can contribute to the strengthening of fiscal positions that is expected to be needed in many countries. There are, nevertheless, also difficult trade-offs to face, notably in the somewhat greater caution now warranted in moving to more aggressive emissions pricing. However, the simple policy guidelines for addressing climate issues remain fundamentally unchanged; the need to deploy a range of regulatory, spending, and emissions pricing measures.
Keywords:
SPN; pricing; carbon pricing; public spending; policy; price; C. pricing carbon; emissions pricing; opportunity cost; shadow pricing; output price; mitigation cost; country support; policy objective; further policy development; policy guideline; price shock; Carbon tax; Emissions trading; Greenhouse gas emissions; Climate policy; Global
Cover IMF Working Papers
The Macroeconomic Effects of Environmental Taxes: A Closer Look at the Feasibility of “Win-Win” Outcomes
Ms. Jenny E Ligthart
This paper reviews recent literature on the macroeconomic effects of environmental taxes. It attempts to delineate the conditions under which a cleaner environment is compatible with attaining macroeconomic objectives, such as more employment and economic growth. The analysis reveals that an environmentally motivated fiscal reform—using the revenues from environmental taxes to cut labor taxes—may yield employment and environmental dividends if the tax burden can be shifted to agents outside the labor market, such as capitalists, transfer recipients, and foreigners. A cleaner environment and a higher rate of economic growth go hand in hand if the environment is considered an important public input into production.
Keywords:
WP; renewable resource; Pigovian tax; public spending; employment dividend; diminishing returns; terms of trade; Abatement; environmental taxes; double dividend; endogenous growth; green tax reform; optimal taxation; pollution.; physical capital; rate of economic growth; public goods; market economy; Environmental policy; Natural resources; Labor taxes