DeFiPP Research Seminar by Christian Pröbsting (KU Leuven)

Aggregate and distributional effects of a carbon tax

Abstract

To identify the households most affected by a carbon tax I set up a multi-sector model with putty-clay technology. A $100-per-ton carbon tax cuts emissions by 25% after 5 years, but
reduces output by 3% in the short run and 4% in the long run. Initially, the tax is progressive despite poorer households spending more on carbon-intensive goods, the prices of which rise.
The complementarity of capital and energy causes a sharp decline in capital income, affecting top earners the most, and leads to job cuts in capital goods-producing industries that employ
high-income earners. Over time the tax incidence flattens.

Contact : Romain Houssa - Romain.Houssa@unamur.be
Télecharger : vCal