Quality, not quantity

The Economist’s Free Exchange blog interprets recent research which suggests that the economic effects of environmental regulation are not nearly as severe as those on the pro-business right would have it.

There are several possible explanations for the finding. One is that damage from environmental regulation is not great enough to change the overall productivity figures. A rule of thumb says a 10% change in the oil price is associated with a 0.2% change in GDP, so if green taxes push up energy prices by only a few cents, their macroeconomic impact might be modest. The effect on jobs, investment or trade, though, might be greater.

Another explanation may be that stricter environmental regulations do as much good as harm.

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