^aDepartment of Economics, 223 Littauer Center, Harvard University, Cambridge, MA 2138, USA. E-mail: ngmankiw@fas.harvard.edu

Abstract

Many economists favor higher taxes on energy-related products such as gasoline, while the general public is more skeptical. This essay, based on a talk given at the March 2008 meeting of the Eastern Economic Association, discusses various aspects of this policy debate. It focuses, in particular, on the use of these taxes to correct for various externalities — an idea advocated long ago by British economist Arthur Pigou.