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Including Fossil-fuel Consumption Subsidies in the GTAP Data Base

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  • Maksym Chepeliev
  • Robert McDougall
  • Dominique van der Mensbrugghe

Abstract

Historically fossil-fuel consumption subsidies have been one of the most widely used energy and public policy interventions. According to the International Energy Agency (IEA), in 2014 they amounted to $493 billion worldwide, which is equivalent to 0.6% of global GDP. Their contribution is even more significant for most energy exporting countries, in many cases exceeding 5-15% of national GDP. However, despite their large magnitude, fossil-fuel consumption subsidies are not explicitly represented in most global economic databases and models, including the Global Trade Analysis Project (GTAP) Data Base, as they are generally not captured by the input-output framework. In this paper, we present methods to integrate pre-tax fossil-fuel consumption subsidies to the GTAP Data Base and produce a version of the GTAP 9.2 Data Base that includes these subsidies. The proposed approach includes updates of energy commodity market prices and corresponding tax rates, within the GTAP Data Base build process. Including fossil-fuel consumption subsidies in the GTAP Data Base provides several benefits for energy and environmental policy simulations, including availability of an additional policy instrument and more consistent representation of energy prices.

Suggested Citation

  • Maksym Chepeliev & Robert McDougall & Dominique van der Mensbrugghe, 2018. "Including Fossil-fuel Consumption Subsidies in the GTAP Data Base," Journal of Global Economic Analysis, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, vol. 3(1), pages 84-121, June.
    • Handle: RePEc:gta:jnlgea:v:3:y:2018:i:1:p:84-121
    DOI: http://dx.doi.org/10.21642/JGEA.030102AF
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    References listed on IDEAS

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    Cited by:

    1. Chepeliev, Maksym & van der Mensbrugghe, Dominique, 2018. "Global Fossil-fuel Subsidy Reform and Paris Agreement," Conference papers 332945, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    2. Angel Aguiar & Maksym Chepeliev & Erwin L. Corong & Robert McDougall & Dominique van der Mensbrugghe, 2019. "The GTAP Data Base: Version 10," Journal of Global Economic Analysis, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, vol. 4(1), pages 1-27, June.
    3. Antimiani, Alessandro & Costantini, Valeria & Paglialunga, Elena, 2023. "Fossil fuels subsidy removal and the EU carbon neutrality policy," Energy Economics, Elsevier, vol. 119(C).
    4. Arun Singh & Niven Winchester & Valerie J. Karplus, 2019. "Evaluating India’S Climate Targets: The Implications Of Economy-Wide And Sector-Specific Policies," Climate Change Economics (CCE), World Scientific Publishing Co. Pte. Ltd., vol. 10(03), pages 1-29, August.
    5. Chepeliev, Maksym & van der Mensbrugghe, Dominique, 2020. "Global fossil-fuel subsidy reform and Paris Agreement," Energy Economics, Elsevier, vol. 85(C).

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