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Efficiency and equity aspects of energy taxation

  • Vandyck, Toon

We analyse the distributional effects of increased oil excises in Belgium by combining aComputable General Equilibrium (CGE) model with the EUROMOD microsimulation frameworkthat exploits the rich detail of household-level data. The link between the CGE model and themicro level is top-down, feeding changes in commodity prices, factor returns and employment bysector into a non-behavioural microsimulation. The results suggest that policymakers face anequity-efficiency trade-off driven by the choice of revenue recycling options. Distributional effectsof the environmental tax reform appear to depend strongly on changes in factor prices and welfarepayments.

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Paper provided by EUROMOD at the Institute for Social and Economic Research in its series EUROMOD Working Papers with number EM12/13.

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Date of creation: 30 Jul 2013
Date of revision:
Publication status: published
Handle: RePEc:ese:emodwp:em12-13
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  1. Lixin Cai & John Creedy & Guyonne Kalb, 2005. "Accounting for Population Ageing in Tax Microsimulation Modelling by Survey Reweighting," Department of Economics - Working Papers Series 935, The University of Melbourne.
  2. Rutherford, Thomas F. & Tarr, David G., 2008. "Poverty effects of Russia's WTO accession: Modeling "real" households with endogenous productivity effects," Journal of International Economics, Elsevier, vol. 75(1), pages 131-150, May.
  3. Parry Ian W. H., 1995. "Pollution Taxes and Revenue Recycling," Journal of Environmental Economics and Management, Elsevier, vol. 29(3), pages S64-S77, November.
  4. Thomas Hertel & Jeffrey Reimer, 2005. "Predicting the poverty impacts of trade reform," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 14(4), pages 377-405.
  5. S. Proost & D. Regemorter, 1995. "The double dividend and the role of inequality aversion and macroeconomic regimes," International Tax and Public Finance, Springer, vol. 2(2), pages 207-219, August.
  6. François Bourguignon & Amedeo Spadaro, 2006. "Microsimulation as a tool for evaluating redistribution policies," Journal of Economic Inequality, Springer, vol. 4(1), pages 77-106, April.
  7. Speck, Stefan, 1999. "Energy and carbon taxes and their distributional implications," Energy Policy, Elsevier, vol. 27(11), pages 659-667, October.
  8. Zhang, ZhongXiang & Baranzini, Andrea, 2000. "What do we know about carbon taxes? an inquiry into their impacts on competitiveness and distribution of income," MPRA Paper 13225, University Library of Munich, Germany, revised Jan 2003.
  9. Bovenberg, A.L. & de Mooij, R.A., 1994. "Environmental levies and distortionary taxation," Other publications TiSEM 4b32deaa-ec2f-4de7-b59b-9, Tilburg University, School of Economics and Management.
  10. Don Fullerton, 2010. "Six Distributional Effects of Environmental Policy," CESifo Working Paper Series 3299, CESifo Group Munich.
  11. Luc Savard, 2003. "Poverty and Income Distribution in a CGE-Household Micro-Simulation Model: Top-Down/Bottom Up Approach," Cahiers de recherche 0343, CIRPEE.
  12. Rausch, Sebastian & Metcalf, Gilbert E. & Reilly, John M., 2011. "Distributional impacts of carbon pricing: A general equilibrium approach with micro-data for households," Energy Economics, Elsevier, vol. 33(S1), pages S20-S33.
  13. Metcalf, Gilbert E., 1999. "A Distributional Analysis of Green Tax Reforms," National Tax Journal, National Tax Association, vol. 52(n. 4), pages 655-82, December.
  14. Nicolas Hérault, 2010. "Sequential linking of Computable General Equilibrium and microsimulation models: a comparison of behavioural and reweighting techniques," International Journal of Microsimulation, International Microsimulation Association, vol. 3(1), pages 35-42.
  15. Lawrence Goulder, 1995. "Environmental taxation and the double dividend: A reader's guide," International Tax and Public Finance, Springer, vol. 2(2), pages 157-183, August.
  16. Labandeira, Xavier & Labeaga, José M. & Rodríguez, Miguel, 2009. "An integrated economic and distributional analysis of energy policies," Energy Policy, Elsevier, vol. 37(12), pages 5776-5786, December.
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