General equilibrium impact of an energy-saving policy in the public sector
AbstractWe analyse a disregarded environmental policy instrument: a switch in government expenditure away from energy (or other natural resources) and toward a composite good which includes energy-saving expenditure. We first develop two variants of an analytical general equilibrium model. A composite good is produced with constant returns to scale, and energy is imported or produced domestically with diminishing returns, yielding a differential rent to its owners. The government purchases energy and composite goods from private firms. Such a policy unambiguously increases employment. It also raises private consumption and welfare under two conditions: (i) it is not too costly and (ii) the initial share of the resource is smaller in public spending than in private consumption, or the difference is small enough. We then run numerically a model featuring both importation and domestic production of energy (oil, gas and electricity), for the OECD as a whole. Simulations show that employment, welfare and private consumption rise. We provide magnitudes for different parameter values.
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Bibliographic InfoArticle provided by European Association of Environmental and Resource Economists in its journal Environmental and Resource Economics.
Volume (Year): 38 (2007)
Issue (Month): 2 (October)
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Web page: http://www.springerlink.com/link.asp?id=100263
Resource conservation; Energy conservation; Public spending; Employment; General equilibrium; Multi-sectors models; E62; H57; Q38;
Other versions of this item:
- Meriem Hamdi-Cherif & Philippe Quirion, 2007. "General equilibrium impact of an energy-saving policy in the public sector," Post-Print halshs-00639321, HAL.
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
- H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement
- Q38 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Government Policy (includes OPEC Policy)
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