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The Double Dividend hypothesis in a CGE model: Specific factors and the carbon base

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  • Fraser, Iain
  • Waschik, Robert

Abstract

We use a Computable General Equilibrium model to empirically examine the Double Dividend (DD) hypothesis. Using the GTAP model data for Australia, we examine three environmental taxes on the production of energy goods. Following Bento and Jacobsen (2007), we examine the role played by specific factors in the production of energy goods. Our results provide support for the existence of a strong DD in Australia when revenue is recycled through reductions in consumption taxes. The strong DD is larger when the share of specific factors is higher, and is much more pronounced when carbon taxes are charged on the production (origin-based accounting) rather than the usage (destination-based accounting) of carbon. These results draw attention to the importance of the definition of the carbon base and have implications for the scale of carbon leakage.

Suggested Citation

  • Fraser, Iain & Waschik, Robert, 2013. "The Double Dividend hypothesis in a CGE model: Specific factors and the carbon base," Energy Economics, Elsevier, vol. 39(C), pages 283-295.
  • Handle: RePEc:eee:eneeco:v:39:y:2013:i:c:p:283-295 DOI: 10.1016/j.eneco.2013.05.009
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    References listed on IDEAS

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    Cited by:

    1. Ozana Nadoveza Tomislav Sekur Marija Beg, 2016. "General Equilibrium Effects of Lower Labor Tax Burden in Croatia," Zagreb International Review of Economics and Business, Faculty of Economics and Business, University of Zagreb, vol. 19(SCI), pages 1-13, December.
    2. Harry Clarke & Iain Fraser & Robert George Waschik, 2014. "How Much Abatement Will Australia's Emissions Reduction Fund Buy?," Economic Papers, The Economic Society of Australia, vol. 33(4), pages 315-326, December.
    3. Yuanying Chi & Zhengquan Guo & Yuhua Zheng & Xingping Zhang, 2014. "Scenarios Analysis of the Energies’ Consumption and Carbon Emissions in China Based on a Dynamic CGE Model," Sustainability, MDPI, Open Access Journal, vol. 6(2), pages 1-26, January.

    More about this item

    Keywords

    Environmental taxes; Double Dividend; Specific factors;

    JEL classification:

    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models

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