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But they then add another, large-scale infrastructure investment in the first decade with debt financing and find that it can *counter* the negative carbon tax impact (they use Calderon et al 2015 https://onlinelibrary.wiley.com/doi/abs/10.1002/jae.2373 …, green line) https://www.imf.org/-/media/Files/Publications/WEO/2020/October/English/AnnexCh3.ashx …pic.twitter.com/DR62tD9znk
And even then, IMF also accepts that the economic cost will go negative in 2030s after the initial 1% GDP crash investments (grey line, although that also includes climate damage)pic.twitter.com/5cRRncq6pZ
Obviously, if we believe that more (real) infrastructure, such as *more* roads, comms and energy increases growth, then by all means let's do that But adding *another* policy that increases growth, doesn't mean carbon taxes still don't decrease growth
Prudent climate investments make sense because they increase total welfare (slightly lower GDP, but avoid more climate damage) But the economics haven't changed: cutting CO₂, making energy more expensive still means lower GDP (Nordhaus standard model, https://www.sciencedirect.com/science/article/pii/S0040162520304157 …)pic.twitter.com/AZpI4h8v6c
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