Rui M. Pereira

Environmental Fiscal Reform and Fiscal Consolidation: The Quest for the Third Dividend in Portugal

This article explores the capacity for environmental fiscal reform to reduce carbon dioxide (CO2) emissions, stimulate economic performance, and promote fiscal sustainability. Simulation results suggest that reforms based on CO2 taxation stimulate gross domestic product (GDP) when tax revenues are used to promote private or public investment and stimulate employment when used to finance reductions in personal income taxation or firms’ social security contributions. More generally, reforms allow for reductions in the costs of climate policy, a weaker realization of the second dividend. In addition, several reforms lead to reductions in public debt, the realization of a third dividend. When political constraints on reducing public spending are considered, however, this third dividend only materializes when revenues finance public investment or reductions in the firms’ social security contributions. Overall, our results suggest that low growth and high public debt need not be regarded as hindrances for environmental fiscal reform but can actually be seen as catalysts.

Office space allocation optimization

In large organizations, the allocation of buildings and office space to departments and employees is a challenging task. Optimal office space allocation has the potential to maximize synergies between employees within an organization. In this paper, we study the performance of a greedy search algorithm and a tabu search algorithm for generating high quality solutions to the office space allocation problem. The objectives are to maximize synergies in the organization, minimize the overusage of limited office space and maximize the number of buildings and rooms that can be completely closed. Computational experiments show that a tabu search algorithm generates higher quality solutions than a greedy local search algorithm with the same computational budget.

Reducing Carbon Emissions in Portugal: The Relative Roles of Fossil-Fuel Prices, Energy Efficiency, and Carbon Taxation

We assess the role of fossil fuel prices, energy efficiency, and carbon taxation in achieving climate policy goals using a dynamic general-equilibrium model of the Portuguese economy. Given the forecasts for international fossil fuel prices, improving energy efficiency and implementing a new carbon tax have significantly different economic and budgetary effects. Greater energy efficiency reduces emissions and has a positive economic effect, but increases public and foreign debt. A carbon tax reduces emissions at a cost for the economy, but leads to positive effects on public and foreign debt. Thus, it is important to pursue both strategies. We estimate that under the reference-price scenario, a steady energy efficiency gain of 2%–2.5% per year and a carbon tax of at least 35 € per tCO2 are needed to achieve the stated goal of reducing carbon dioxide emissions by 2030 by an amount equivalent to 40% of the emissions in 1990. These views were fully integrated in a proposal presented by the Commission for Environmental Tax Reform to the Portuguese Government in September 2014, and then discussed in Parliament in November 2014, before enacting a new carbon tax on 1 January 2015.

Controlling the Public Wage Bill in Portugal: The Case of University Professors

Public wages are a large share of the public budget in Portugal and, therefore, hiring freezes are a central feature of the efforts to control the public deficit. The system of public career advancement, however, may lead to increases in the wage bill even in the presence of hiring freezes. We estimate this wage drift effect in the case of university professors. We use a logit analysis with 1999 census data to identify the determinants of career advancement, to estimate the employment distribution in previous years and to obtain the corresponding wage bill. We estimate that the annual wage drift is 2.6%, a figure well above the gross domestic product growth rate and, therefore, we conclude that hiring freezes may be far from enough to stop the expansion of the public wage bill.