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Microsimulating the Effects of Household Energy Price Changes in Spain

  • Xavier Labandeira

    (rede & Department of Applied Economics. University of Vigo)

  • Jose M. Labeaga

    (Department of Economic Analysis 2. UNED)

  • Miguel Rodriguez

    (rede & Department of Applied Economics. University of Vigo)

In this paper we present a microsimulation model to calculate the effects of hypothetical ex-ante price changes in the Spanish energy domain. The model rests on our prior estimation of a demand system which is especially designed for simultaneous analysis of different energy goods and uses household data from 1973 to 1995. Our objective is to obtain in-depth information on the behavioural responses by different types of households, which will allow us to determine the welfare effects of such price changes, their distribution across society and the environmental consequences within the residential sector. Although the model used is able to reproduce any type of price change, we illustrate the paper with an actual simulation of the effects of energy taxes that resemble a 50 Euro tax on CO2 (carbon dioxide) emissions. The results show a significant response by households, sizeable emission reductions, tax revenues, welfare changes and distributional effects. The simulated policy can thus be considered a feasible option to tackle some of the current and severe inefficiencies in Spanish energy and environmental domains.

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File URL: http://econwpa.repec.org/eps/pe/papers/0412/0412001.pdf
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Paper provided by EconWPA in its series Public Economics with number 0412001.

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Length: 30 pages
Date of creation: 02 Dec 2004
Date of revision: 02 Dec 2004
Handle: RePEc:wpa:wuwppe:0412001
Note: Type of Document - pdf; pages: 30
Contact details of provider: Web page: http://econwpa.repec.org

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  1. Xavier Labandeira & José M. Labeaga & Miguel Rodríguez, 2006. "A Residential Energy Demand System for Spain," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 87-112.
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  10. Zhang, ZhongXiang & Baranzini, Andrea, 2004. "What do we know about carbon taxes? An inquiry into their impacts on competitiveness and distribution of income," Energy Policy, Elsevier, vol. 32(4), pages 507-518, March.
  11. Paul Ekins & Stefan Speck, 1999. "Competitiveness and Exemptions From Environmental Taxes in Europe," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 13(4), pages 369-396, June.
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  13. Vaage, K., 2000. "heating Technology and Energy Use: a Discrete/Continuous Choice Approach to Norwegian Household Energy Demand," Norway; Department of Economics, University of Bergen 214, Department of Economics, University of Bergen.
  14. 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.
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  18. Nesbakken, Runa, 1999. "Price sensitivity of residential energy consumption in Norway," Energy Economics, Elsevier, vol. 21(6), pages 493-515, December.
  19. Puller, Steven L. & Greening, Lorna A., 1999. "Household adjustment to gasoline price change: an analysis using 9 years of US survey data," Energy Economics, Elsevier, vol. 21(1), pages 37-52, February.
  20. 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.
  21. Kayser, Hilke A., 2000. "Gasoline demand and car choice: estimating gasoline demand using household information," Energy Economics, Elsevier, vol. 22(3), pages 331-348, June.
  22. James Banks & Richard Blundell & Arthur Lewbel, 1997. "Quadratic Engel Curves And Consumer Demand," The Review of Economics and Statistics, MIT Press, vol. 79(4), pages 527-539, November.
  23. King, Mervyn A., 1983. "Welfare analysis of tax reforms using household data," Journal of Public Economics, Elsevier, vol. 21(2), pages 183-214, July.
  24. Keen, Michael, 1986. "Zero Expenditures and the Estimation of Engel Curves," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 1(3), pages 277-86, July.
  25. Nicol, C. J., 2003. "Elasticities of demand for gasoline in Canada and the United States," Energy Economics, Elsevier, vol. 25(2), pages 201-214, March.
  26. Holtedahl, Pernille & Joutz, Frederick L., 2004. "Residential electricity demand in Taiwan," Energy Economics, Elsevier, vol. 26(2), pages 201-224, March.
  27. J. A. Hausman & W. K. Newey & J. L. Powel, 1988. "Nonlinear Errors in Variables: Estimation of Some Engel Curves," Working papers 504, Massachusetts Institute of Technology (MIT), Department of Economics.
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