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Measuring climate policy stringency: a shadow price approach

Listed author(s):
  • Wilhelm Althammer

    (HHL Leipzig Graduate School of Management)

  • Erik Hille

    ()

    (HHL Leipzig Graduate School of Management)

Abstract To assess the effect of environmental policy on production structures, trade structures, or foreign direct investment, a measure for the stringency of policy is necessary. Measures typically used in empirical studies share several disadvantages: they are not available on a sectoral basis to reflect concerns of industry competitiveness; they are not available for a wide range of countries to allow for international comparisons; or they are not broad enough to reflect the multidimensionality of environmental policy. This paper develops a thorough, internationally comparable, sector-specific measure of multidimensional climate policy stringency where a shadow price approach serves as a basis. The approach is applied to climate policy by determining sector-specific emission-relevant energy costs on the basis of the sectors’ usage of emission-relevant energy carriers and the carriers’ respective prices. The resulting shadow price estimates are heterogeneous and can be applied in future research to test for carbon leakage and pollution havens.

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File URL: http://link.springer.com/10.1007/s10797-016-9405-4
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Article provided by Springer & International Institute of Public Finance in its journal International Tax and Public Finance.

Volume (Year): 23 (2016)
Issue (Month): 4 (August)
Pages: 607-639

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Handle: RePEc:kap:itaxpf:v:23:y:2016:i:4:d:10.1007_s10797-016-9405-4
DOI: 10.1007/s10797-016-9405-4
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