Matlab Codes--Optimal Environmental Policy and Distortionary Fiscal Policy Interactions: A DSGE Perspective

This set of codes replicates the quantitative results presented in the article, which examines the interplay between optimal environmental policy and distortionary fiscal policy within a dynamic stochastic general equilibrium (DSGE) framework. The codes implement the model’s calibration, solve for the Ramsey-optimal policies, and simulate the economy’s response to various environmental and fiscal shocks. The simulations illustrate how optimal carbon taxation and abatement efforts adjust in response to pollution, government spending, and productivity shocks. Researchers can use these codes to reproduce the findings, explore sensitivity analyses, or extend the framework to related policy questions.