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Microsimulating the Effects of Household Energy Price Changes in Spain

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  • Miguel Rodríguez

    (Universidade de Vigo)

  • José M. Labeaga

    (Analysis II, UNED)

Abstract

In this paper we present a microsimulation model to calculate the effects of hypothetical ex-ante price changes in the Spanish energy domain. The model rests on our prior estimation of a demand system which is especially designed for simultaneous analysis of different energy goods and uses household data from 1973 to 1995. Our objective is to obtain in depth information on the behavioural responses by different types of households, which will allow us to determine the welfare effects of such price changes, their distribution across society and the environmental consequences within the residential sector. Although the model used is able to reproduce any type of price change, we illustrate the paper with an actual simulation of the effects of energy taxes that resemble a 50 Euro tax on CO2 (carbon dioxide) emissions. The results show a significant response by households, sizeable emission reductions, tax revenues, welfare changes and distributional effects. The simulated policy can thus be considered a feasible option to tackle some of the current and severe inefficiencies in Spanish energy and environmental domains.

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Bibliographic Info

Paper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number 2004.161.

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Date of creation: Dec 2004
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Handle: RePEc:fem:femwpa:2004.161

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Keywords: In this paper we present a microsimulation model to calculate the effects of hypothetical ex-ante price changes in the Spanish energy domain. The model rests on our prior estimation of a demand system which is especially designed for simultaneous analysis of different energy goods and uses household data from 1973 to 1995. Our objective is to obtain in depth information on the behavioural responses by different types of households; which will allow us to determine the welfare effects of such price changes; their distribution across society and the environmental consequences within the residential sector. Although the model used is able to reproduce any type of price change; we illustrate the paper with an actual simulation of the effects of energy taxes that resemble a 50 Euro tax on CO2 (carbon dioxide) emissions. The results show a significant response by households; sizeable emission reductions; tax revenues; welfare changes and distributional effects. The simulated policy can thus be considered a feasible option to tackle some of the current and severe inefficiencies in Spanish energy and environmental domains.;

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References

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  1. Xavier Labandeira & José M. Labeaga & Miguel Rodríguez, 2005. "A Residential Energy Demand System for Spain," Working Papers 0501, Massachusetts Institute of Technology, Center for Energy and Environmental Policy Research.
  2. Cornwell, A. & Creedy, J., 1995. "CArbon Taxation, Prices and Inequality in Australia," Department of Economics - Working Papers Series 481, The University of Melbourne.
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  22. Tiezzi, Silvia, 2005. "The welfare effects and the distributive impact of carbon taxation on Italian households," Energy Policy, Elsevier, vol. 33(12), pages 1597-1612, August.
  23. Labandeira, Xavier & Labeaga, Jose M., 2002. "Estimation and control of Spanish energy-related CO2 emissions: an input-output approach," Energy Policy, Elsevier, vol. 30(7), pages 597-611, June.
  24. Terry Barker & Jonathan Köhler, 1998. "Equity and ecotax reform in the EU: achieving a 10 per cent reduction in CO2 emissions using excise duties," Fiscal Studies, Institute for Fiscal Studies, vol. 19(4), pages 375-402, November.
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Citations

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Cited by:
  1. Mònica Serrano, 2007. "The Production and Consumption Accounting Principles as a Guideline for Designing Environmental Tax Policy," Working Papers 2007.8, Fondazione Eni Enrico Mattei.
  2. Xavier Labandeira & José M. Labeaga & Miguel Rodríguez, 2006. "A Residential Energy Demand System for Spain," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 87-112.
  3. Xavier Labandeira & José M. Labeaga & Miguel Rodríguez, 2006. "A Macro and Microeconomic Integrated Approach to Assessing the Effects of Public Policies," Working Papers 22, ECINEQ, Society for the Study of Economic Inequality.
  4. Labandeira, Xavier & Labeaga, José M. & Rodríguez, Miguel, 2009. "An integrated economic and distributional analysis of energy policies," Energy Policy, Elsevier, vol. 37(12), pages 5776-5786, December.
  5. Ivan Faiella, 2011. "The demand for energy of Italian households," Temi di discussione (Economic working papers) 822, Bank of Italy, Economic Research and International Relations Area.

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