Fiscal Consolidation and Climate Policy: An Overlapping Generations Perspective
AbstractWe examine the distributional and e ciency impacts of climate policy in the context of fiscal consolidation in a dynamic general-equilibrium overlapping generations model of the US economy. The model includes a disaggregated production structure, including energy sector detail and advanced low- or zero-carbon energy technologies, and detail on government taxes and spending. In contrast to revenue-neutral carbon tax swaps, using the carbon revenue for deficit reduction implies a relaxation of future public budgets as debt repayment results in lower interest obligations. While we show that the intergenerational welfare impacts depend importantly on what tax recycling instrument is used, we find that combining debt consolidation with a carbon policy entails the possibility of sustained welfare gains for future generations. We thus argue that combining fiscal and climate policy may o er the chance for positive societal gains (without considering potential benefits from averted climate change). Importantly, this may enhance the political support for revenue-raising climate policies that are framed over the next couples of decades. --
Download InfoIf 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.
Bibliographic InfoPaper provided by Verein für Socialpolitik / German Economic Association in its series Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order with number 80026.
Date of creation: 2013
Date of revision:
Other versions of this item:
- Rausch, Sebastian, 2013. "Fiscal consolidation and climate policy: An overlapping generations perspective," Energy Economics, Elsevier, Elsevier, vol. 40(S1), pages S134-S148.
- Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters
- C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
- H60 - Public Economics - - National Budget, Deficit, and Debt - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2014-02-02 (All new papers)
- NEP-DGE-2014-02-02 (Dynamic General Equilibrium)
- NEP-ENE-2014-02-02 (Energy Economics)
- NEP-ENV-2014-02-02 (Environmental Economics)
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.:
- Rutherford, Thomas F., 1995. "Extension of GAMS for complementarity problems arising in applied economic analysis," Journal of Economic Dynamics and Control, Elsevier, Elsevier, vol. 19(8), pages 1299-1324, November.
- Rutherford, Thomas F, 1999. "Applied General Equilibrium Modeling with MPSGE as a GAMS Subsystem: An Overview of the Modeling Framework and Syntax," Computational Economics, Society for Computational Economics, Society for Computational Economics, vol. 14(1-2), pages 1-46, October.
- David Altig, 2001. "Simulating Fundamental Tax Reform in the United States," American Economic Review, American Economic Association, American Economic Association, vol. 91(3), pages 574-595, June.
- Jensen, Svend E Hougaard & Rutherford, Thomas F, 2002.
" Distributional Effects of Fiscal Consolidation,"
Scandinavian Journal of Economics, Wiley Blackwell,
Wiley Blackwell, vol. 104(3), pages 471-93, September.
- Svend E. Hougaard Jensen & Thomas F. Rutherford, . "Distributional Effects of Fiscal Consolidation," EPRU Working Paper Series, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics 99-24, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
- Rasmussen, Tobias N. & Rutherford, Thomas F., 2004. "Modeling overlapping generations in a complementarity format," Journal of Economic Dynamics and Control, Elsevier, Elsevier, vol. 28(7), pages 1383-1409, April.
- Bovenberg, A.L. & Goulder, L.H., 1996.
"Optimal environmental taxation in the presence of other taxes: General equilibrium analyses,"
Open Access publications from Tilburg University
urn:nbn:nl:ui:12-73560, Tilburg University.
- Bovenberg, A Lans & Goulder, Lawrence H, 1996. "Optimal Environmental Taxation in the Presence of Other Taxes: General-Equilibrium Analyses," American Economic Review, American Economic Association, American Economic Association, vol. 86(4), pages 985-1000, September.
- A. Lans Bovenberg & Lawrence H. Goulder, 1994. "Optimal Environmental Taxation in the Presence of Other Taxes: General Equilibrium Analyses," NBER Working Papers 4897, National Bureau of Economic Research, Inc.
- Lau, Morten I. & Pahlke, Andreas & Rutherford, Thomas F., 2002. "Approximating infinite-horizon models in a complementarity format: A primer in dynamic general equilibrium analysis," Journal of Economic Dynamics and Control, Elsevier, Elsevier, vol. 26(4), pages 577-609, April.
- Mustafa H. Babiker & Gilbert E. Metcalf & John Reilly, 2002.
"Tax Distortions and Global Climate Policy,"
NBER Working Papers
9136, National Bureau of Economic Research, Inc.
- Mustafa H. Babiker & Gilbert E. Metcalf & John Reilly, 2002. "Tax Distortions and Global Climate Policy," Discussion Papers Series, Department of Economics, Tufts University, Department of Economics, Tufts University 0211, Department of Economics, Tufts University.
- Robert J. Barro & Charles J. Redlick, 2011. "Macroeconomic Effects From Government Purchases and Taxes," The Quarterly Journal of Economics, Oxford University Press, vol. 126(1), pages 51-102.
- Mouez Fodha & Thomas Seegmuller & Hiroaki Yamagami, 2014.
"Environmental Policies under Debt Constraint,"
Working Papers, HAL
- Anna Grodecka & Karlygash Kuralbayeva, 2014. "Prices vs Quantities Debate: The role of business cycles," OxCarre Working Papers, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford 137, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (ZBW - German National Library of Economics).
If references are entirely missing, you can add them using this form.