The Impact of a Carbon Tax on Sectors Competitiveness
Asymmetric climate policies are expected to distort the level-playing field regarding international trade, singularly to the detriment of small open economies. The paper develops a flexible method that provides essential input regarding the design of offsetting measures at the sectoral level. It builds on input-output analysis and standard input-output data to provide proxies for both the carbon-intensity and the trade-intensity of production. These are used to reckon the impact that such policies as carbon taxation have on the price-competitiveness of sectors. The method is then applied to the case of Belgium.
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