Advanced Search
MyIDEAS: Login to save this paper or follow this series

Fostering Renewables and Recycling a Carbon Tax: Joint Aggregate and Intergenerational Redistributive Effects

Contents:

Author Info

  • Frédéric Gonand

Abstract

A rising share of renewables in the energy mix pushes up the average price of energy - and so does a carbon tax. However the former bolsters the accumulation of capital whereas the latter, if fully recycled, does not. Thus, in general equilibrium, the effects on growth and intertemporal welfare of these two environmental policies differ. The present article assesses and compares these effects. It relies on a computable general equilibrium model with overlapping generations, an energy module and a public finance module. The main result is that an increasing share of renewables in the energy mix and a fully recycled carbon tax have opposite (though limited) impacts on activity and individuals’ intertemporal welfare in the long run. The recycling of a carbon tax fosters consumption and labour supply, and thus growth and welfare, whereas an increasing share of renewables does not. Results also suggest that a higher share of renewables and a recycled carbon tax trigger intergenerational redistributive effects, with the former being relatively detrimental for young generations and the latter being pro-youth. The policy implication is that a social planner seeking to modify the structure of the energy mix while achieving some neutrality as concerns the GDP and triggering some proyouth intergenerational equity, could usefully contemplate the joint implementation of higher quantitative targets for the future development of renewables and a carbon tax fully recycled through lower proportional taxes.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://cec-repec.site11.com/RePEc/cec/wpaper/14-05-Cahier-R-2014-08-Gonand.pdf
File Function: First version, 2014
Download Restriction: no

Bibliographic Info

Paper provided by Chaire Economie du Climat in its series Working Papers with number 1408.

as in new window
Length: 40 pages
Date of creation: 2014
Date of revision:
Handle: RePEc:cec:wpaper:1408

Contact details of provider:
Web page: http://cec-repec.site11.com/
More information through EDIRC

Related research

Keywords: Energy transition; intergenerational redistribution; overlapping generations; carbon tax; general equilibrium;

Other versions of this item:

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Miles, David, 1999. "Modelling the Impact of Demographic Change upon the Economy," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 109(452), pages 1-36, January.
  2. Michel Normandin & Pascal St-Amour, 1998. "Substitution, risk aversion, taste shocks and equity premia," Journal of Applied Econometrics, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 13(3), pages 265-281.
  3. Epstein, Larry G & Zin, Stanley E, 1991. "Substitution, Risk Aversion, and the Temporal Behavior of Consumption and Asset Returns: An Empirical Analysis," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 99(2), pages 263-86, April.
  4. Broer, D Peter & Westerhout, Ed W M T & Bovenberg, A Lans, 1994. " Taxation, Pensions and Saving in a Small Open Economy," Scandinavian Journal of Economics, Wiley Blackwell, Wiley Blackwell, vol. 96(3), pages 403-24.
  5. Axel Boersch-Supan & Florian Heiss & Alexander Ludwig & Joachim Winter, 2003. "Pension Reform, Capital Markets and the Rate of Return," German Economic Review, Verein für Socialpolitik, Verein für Socialpolitik, vol. 4(2), pages 151-181, 05.
  6. Paul A. Samuelson, 1958. "An Exact Consumption-Loan Model of Interest with or without the Social Contrivance of Money," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 66, pages 467.
  7. John, A. & Pecchenino, R. & Schimmelpfennig, D. & Schreft, S., 1995. "Short-lived agents and the long-lived environment," Journal of Public Economics, Elsevier, Elsevier, vol. 58(1), pages 127-141, September.
  8. Grepperud, Sverre & Rasmussen, Ingeborg, 2004. "A general equilibrium assessment of rebound effects," Energy Economics, Elsevier, Elsevier, vol. 26(2), pages 261-282, March.
  9. Daron Acemoglu, 2002. "Directed Technical Change," Review of Economic Studies, Oxford University Press, vol. 69(4), pages 781-809.
  10. Brigitte Knopf, Ottmar Edenhofer, Christian Flachsland, Marcel T. J. Kok, Hermann Lotze-Campen, Gunnar Luderer, Alexander Popp, Detlef P. van Vuuren, 2010. "Managing the Low-Carbon Transition - From Model Results to Policies," The Energy Journal, International Association for Energy Economics, International Association for Energy Economics, vol. 0(Special I).
  11. Pearce, David W, 1991. "The Role of Carbon Taxes in Adjusting to Global Warming," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 101(407), pages 938-48, July.
  12. Oecd, 2006. "Projecting OECD Health and Long-Term Care Expenditures: What Are the Main Drivers?," OECD Economics Department Working Papers, OECD Publishing 477, OECD Publishing.
  13. Bovenberg, A. Lans & Heijdra, Ben J., 1998. "Environmental tax policy and intergenerational distribution," Journal of Public Economics, Elsevier, Elsevier, vol. 67(1), pages 1-24, January.
  14. Bohringer, Christoph & Rutherford, Thomas F., 1997. "Carbon Taxes with Exemptions in an Open Economy: A General Equilibrium Analysis of the German Tax Initiative," Journal of Environmental Economics and Management, Elsevier, vol. 32(2), pages 189-203, February.
Full references (including those not matched with items on IDEAS)

Citations

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:cec:wpaper:1408. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Climate Economics Chair).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.