On the Distributional Effect of Carbon Tax in Developing Countries: The Case of Indonesia
This paper analyses the distributional impact of carbon tax in Indonesia, one of the largest carbon emitter developing countries. Using a Computable General Equilibrium (CGE) model with disaggregated households, the result suggests that in contrast to most studies from industrialised countries, the introduction of carbon tax in Indonesia is not necessarily regressive. Its structural change and resource reallocation effect, following the carbon tax, is in favor of factors endowed more proportionately by rural, and lower income households. In addition, the expenditure of lower income households, especially in rural area, are less sensitive to the prices of energy-related commodities. Revenue-recycling through uniform reduction in commodity tax rate may reduce the adverse aggregate output effect, whereas uniform lumpsum transfers may enhance the progressivity. This study demonstrates an example, that encouraging developing countries to reduce carbon emission, may not only increase the efficiency of carbon abatement globally, but also have desirable distributional implication in the developing countries themselves.
|Date of creation:||May 2007|
|Date of revision:||Aug 2007|
|Contact details of provider:|| Postal: |
Web page: http://ceds.fe.unpad.ac.id
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Joaquim Bento Ferreira-Filho & Mark Horridge, 2004. "Economic Integration, Poverty and Regional Inequality in Brazil," Centre of Policy Studies/IMPACT Centre Working Papers g-149, Victoria University, Centre of Policy Studies/IMPACT Centre.
- Arief Anshory Yusuf, 2006.
"Constructing Indonesian Social Accounting Matrix for Distributional Analysis in the CGE Modelling Framework,"
Working Papers in Economics and Development Studies (WoPEDS)
200604, Department of Economics, Padjadjaran University, revised Nov 2006.
- Yusuf, Arief Anshory, 2006. "Constructing Indonesian Social Accounting Matrix for Distributional Analysis in the CGE Modelling Framework," MPRA Paper 1730, University Library of Munich, Germany.
- Baranzini, Andrea & Goldemberg, Jose & Speck, Stefan, 2000. "A future for carbon taxes," Ecological Economics, Elsevier, vol. 32(3), pages 395-412, March.
- Decaluwe, B. & Patry, A. & Savard, L. & Thorbecke, E., 1999.
"Poverty Analysis Within a General Equilibrium Framework,"
Cahiers de recherche
9909, Université Laval - Département d'économique.
- Decaluwe, B. & Patry, A. & Savard, L. & Thorbecke, E., 1999. "Poverty Analysis Within a General Equilibrium Framework," Papers 9909, Laval - Recherche en Politique Economique.
- Hertel, Thomas & Hummels, David & Ivanic, Maros & Keeney, Roman, 2007.
"How confident can we be of CGE-based assessments of Free Trade Agreements?,"
Elsevier, vol. 24(4), pages 611-635, July.
- Hertel, Thomas & David Hummels & Maros Ivanic & Roman Keeney, 2003. "How Confident Can We Be in CGE-Based Assessments of Free Trade Agreements?," GTAP Working Papers 1324, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
- Thomas Hertel & David Hummels & Maros Ivanic & Roman Keeney, 2004. "How Confident Can We Be in CGE-Based Assessments of Free Trade Agreements?," NBER Working Papers 10477, National Bureau of Economic Research, Inc.
- Nabil Annabi & Fatou Cissé & John Cockburn & Bernard Decaluwé, 2005.
"Trade Liberalisation, Growth and Poverty in Senegal: a Dynamic Microsimulation CGE Model Analysis,"
2005-07, CEPII research center.
- Nabil Annabi & Fatou Cissé & John Cockburn & Bernard Decaluwé, 2005. "Trade Liberalisation, Growth and Poverty in Senegal: a Dynamic Microsimulation CGE Model Analysis," Cahiers de recherche 0512, CIRPEE.
- Luc Savard, 2003. "Poverty and Income Distribution in a CGE-Household Micro-Simulation Model: Top-Down/Bottom Up Approach," Cahiers de recherche 0343, CIRPEE.
- Terry Barker & Jonathan Köhler, 1998. "Equity and ecotax reform in the EU: achieving a 10 per cent reduction in CO2 emissions using excise duties," Fiscal Studies, Institute for Fiscal Studies, vol. 19(4), pages 375-402, November.
- Sherman, Robinson & Robilliard, Anne-Sophie & Bourguignon, François, 2005.
"Representative versus real households in the macro-economic modelling of inequality,"
Economics Papers from University Paris Dauphine
123456789/4535, Paris Dauphine University.
- François Bourguignon & Anne-Sophie Robilliard & Sherman Robinson, 2003. "Representative versus real households in the macro-economic modeling of inequality," Working Papers DT/2003/10, DIAL (Développement, Institutions et Mondialisation).
- François Bourguignon & Anne-Sophie Robilliard & Sherman Robinson, 2003. "Representative versus real households in the macro-economic modeling of inequality," DELTA Working Papers 2003-05, DELTA (Ecole normale supérieure).
- Erwin L. Corong, 2007. "Economic and Poverty Impacts of a Voluntary Carbon Reduction for a Small Liberalized Developing Economy: The Case of the Philippines," Working Papers 2007.9, Fondazione Eni Enrico Mattei.
- Cornwell, A. & Creedy, J., 1995.
"CArbon Taxation, Prices and Inequality in Australia,"
Department of Economics - Working Papers Series
481, The University of Melbourne.
- Antonia Cornwell & John Creedy, 1996. "Carbon taxation, prices and inequality in Australia," Fiscal Studies, Institute for Fiscal Studies, vol. 17(3), pages 21-38, August.
- Caesar B. Cororaton & John Cockburn, 2005. "Trade Reform and Poverty in the Philippines: a Computable General Equilibrium Microsimulation Analysis," Cahiers de recherche 0513, CIRPEE.
- Peter G. Warr, 2001. "Welfare Effects of an Export Tax: Thailand's Rice Premium," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(4), pages 903-920.
- Xavier Labandeira & José M. Labeaga, 1999. "Combining input-output analysis and micro-simulation to assess the effects of carbon taxation on Spanish households," Fiscal Studies, Institute for Fiscal Studies, vol. 20(3), pages 305-320, September.
- Brännlund, Runar & Nordström, Jonas, 1999.
"Carbon Tax Simulations Using a Household Demand Model,"
Umeå Economic Studies
508, Umeå University, Department of Economics.
- Brannlund, Runar & Nordstrom, Jonas, 2004. "Carbon tax simulations using a household demand model," European Economic Review, Elsevier, vol. 48(1), pages 211-233, February.
- Pearson, Ken & Channing Arndt, 2000. "Implementing Systematic Sensitivity Analysis Using GEMPACK," GTAP Technical Papers 474, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
- Elizabeth.J.Symons & Stefan Speck & J.L.R.Proops, 2000. "The Effects of Pollution and Energy Taxes across the European Income Distribution," Keele Department of Economics Discussion Papers (1995-2001) 2000/05, Department of Economics, Keele University.
- Henrik Klinge Jacobsen & Katja Birr-Pedersen & Mette Wier, 2003. "Distributional Implications of Environmental Taxation in Denmark," Fiscal Studies, Institute for Fiscal Studies, vol. 24(4), pages 477-499, December.
- Kirk Hamilton & Grant Cameron, 1994. "Simulating the Distributional Effects of a Canadian Carbon Tax," Canadian Public Policy, University of Toronto Press, vol. 20(4), pages 385-399, December.
- Arndt, Channing, 1996. "An Introduction to Systematic Sensitivity Analysis via Gaussian Quadrature," GTAP Technical Papers 305, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
- Wier, Mette & Birr-Pedersen, Katja & Jacobsen, Henrik Klinge & Klok, Jacob, 2005. "Are CO2 taxes regressive? Evidence from the Danish experience," Ecological Economics, Elsevier, vol. 52(2), pages 239-251, January.
- Iwan J. Azis, 2000. "Simulating economy-wide models to capture the transition from financial crisis to social crisis," The Annals of Regional Science, Springer, vol. 34(2), pages 251-278.
- Frank Jotzo, 2004. "Developing countries and the future of the Kyoto Protocol," Economics and Environment Network Working Papers 0406, Australian National University, Economics and Environment Network.
When requesting a correction, please mention this item's handle: RePEc:unp:wpaper:200705. 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: (Arief Anshory Yusuf)
If references are entirely missing, you can add them using this form.