IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Log in (now much improved!) to save this article

Reducing Fuel Subsidy or Taxing Carbon? Comparing the Two Instruments from the Economy, Environment, and Equity Perspectives for Indonesia

Listed author(s):
  • Arief Anshory Yusuf

    ()

  • Arief Ramayandi

    ()

    (Faculty of Economics, Padjadjaran University, Bandung – Indonesia)

Registered author(s):

    Reducing fuel subsidy and taxing carbon have a tendency toward reducing energy consumption and carbon emissions. However, both instruments may have differing impacts in their magnitudes of the emissions reduction and on the economy as a whole. Using an INDONESIA-E3 (Economy-Equity- Environment) model, a computable general equilibrium (CGE) model which includes carbon emissions, carbon taxation, as well as, strong feature in distributional analysis, this paper compares and contrasts the two instruments to find which policy is better in improving the three pillars of sustainable development: economy, equity, and the environment. The results suggests that given the same amount of government budget saving, a carbon tax is relatively superior to using a fuel subsidy reduction instrument, because it can accelerate the decline in CO2 emissions with a lower cost to the economy in terms of GDP reduction with more favorable distributional effects. This has not taken into account the economic incentives it creates for the economy to be less reliant on carbon-intensive energy

    If 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.

    File URL: http://www.lpem.org/repec/lpe/efijnl/201005.pdf
    Download Restriction: no

    Article provided by Faculty of Economics and Business, University of Indonesia in its journal Economics and Finance in Indonesia.

    Volume (Year): 58 (2010)
    Issue (Month): (April)
    Pages: 115-129

    as
    in new window

    Handle: RePEc:lpe:efijnl:201005
    Contact details of provider: Phone: (021)-7272425
    Web page: http://www.lpem.org

    More information through EDIRC

    No references listed on IDEAS
    You can help add them by filling out this form.

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:lpe:efijnl:201005. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Muhammad Halley Yudhistira)

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.