Distributional impacts of carbon pricing: A general equilibrium approach with micro-data for households
AbstractMany policies to limit greenhouse gas emissions have at their core efforts to put a price on carbon emissions. Carbon pricing impacts households both by raising the cost of carbon intensive products and by changing factor prices. A complete analysis requires taking both effects into account. The impact of carbon pricing is determined by heterogeneity in household spending patterns across income groups as well as heterogeneity in factor income patterns across income groups. It is also affected by precise formulation of the policy (how is the revenue from carbon pricing distributed) as well as the treatment of other government policies (e.g. the treatment of transfer payments). What is often neglected in analyses of policy is the heterogeneity of impacts across households even within income or regional groups. In this paper, we incorporate 15,588 households from the U.S. Consumer and Expenditure Survey data as individual agents in a comparative-static general equilibrium framework. These households are represented within the MIT USREP model, a detailed general equilibrium model of the U.S. economy. In particular, we categorize households by full household income (factor income as well as transfer income) and apply various measures of lifetime income to distinguish households that are temporarily low-income (e.g., retired households drawing down their financial assets) from permanently low-income households. We also provide detailed within-group distributional measures of burden impacts from various policy scenarios.
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Bibliographic InfoArticle provided by Elsevier in its journal Energy Economics.
Volume (Year): 33 (2011)
Issue (Month): S1 ()
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Web page: http://www.elsevier.com/locate/eneco
Carbon pricing; Distributional effects; General equilibrium; Micro-simulation;
Other versions of this item:
- Sebastian Rausch & Gilbert E. Metcalf & John M. Reilly, 2011. "Distributional Impacts of Carbon Pricing: A General Equilibrium Approach with Micro-Data for Households," NBER Working Papers 17087, National Bureau of Economic Research, Inc.
- C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
- C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
- D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
- Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
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"Consumption over the Life Cycle: Facts from Consumer Expenditure Survey Data,"
NBER Working Papers
9382, National Bureau of Economic Research, Inc.
- Jesus Fernández-Villaverde & Dirk Krueger, 2007. "Consumption over the Life Cycle: Facts from Consumer Expenditure Survey Data," The Review of Economics and Statistics, MIT Press, vol. 89(3), pages 552-565, August.
RePEc Biblio mentionsAs found on the RePEc Biblio, the curated bibliography for Economics:CitEc Project, subscribe to its RSS feed for this item.
- Katri Kosonen, 2012. "Regressivity of environmental taxation: myth or reality?," Taxation Papers 32, Directorate General Taxation and Customs Union, European Commission.
- Vandyck, Toon, 2013. "Efficiency and Equity Aspects of Energy Taxation," EUROMOD Working Papers EM12/13, EUROMOD at the Institute for Social and Economic Research.
- Rafael Aigner, 2011. "Environmental Taxation and Redistribution Concerns," Working Paper Series of the Max Planck Institute for Research on Collective Goods 2011_17, Max Planck Institute for Research on Collective Goods, revised Jun 2013.
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