scholarly journals THE ECONOMIC COSTS AND CO-BENEFITS OF CARBON TAXATION: A GENERAL EQUILIBRIUM ASSESSMENT

2018 ◽  
Vol 09 (01) ◽  
pp. 1840006 ◽  
Author(s):  
JARED WOOLLACOTT
Keyword(s):  
General Equilibrium ◽  
Computable General Equilibrium ◽  
Global Economy ◽  
National Level ◽  
The United States ◽  
Assessment Model ◽  
Income Quintile ◽  
Significant Heterogeneity ◽  
Lump Sum ◽  
Climate Policies

I examine the general equilibrium costs of climate policies that levy taxes on carbon dioxide (CO2) emissions in the United States and return the revenue in the form of lump-sum rebates and tax relief over the years 2020 to 2040 using the US regional version of the Applied Dynamic Analysis of the Global Economy (ADAGE-US) forward-looking dynamic Computable General Equilibrium (CGE) model. I approximate the value of co-benefits to these policies that arise from concomitant reductions in nongreenhouse gas (GHG) emissions using the CO-Benefits Risk Assessment model (COBRA). There is significant heterogeneity in costs and co-benefits from climate policies across space and income. Policy costs are generally less than 0[Formula: see text]5% in equivalent variation terms (between a few tens of dollars and several hundred per household, depending on the income quintile), can be fully neutralized for the lowest- quintile households at a modest increase in overall policy cost, and tend to be lower for upper-quintile households in coastal regions. The policy co-benefit values range widely across regions, approximately $150–1250 per household, exceeding the gross cost of the policy for many households, particularly those in the Midwest. Last, I identify a marginal welfare cost of $58[Formula: see text]tCO2 and a marginal co-benefit of $31[Formula: see text]tCO2 at a national level over all households, which implies a required climate benefit of $27[Formula: see text]tCO2 or less to justify the level of abatement achieved by a $25[Formula: see text]tCO2 tax growing at 5%.

Death and Environmental Taxes: Why Market Environmentalism Fails in Liberal Market Economies

2016 ◽  
Vol 16 (1) ◽  
pp. 21-37 ◽  
Author(s):  
Robert MacNeil
Keyword(s):  
Climate Policy ◽  
National Level ◽  
The United States ◽  
Environmental Taxes ◽  
Market Economies ◽  
Climate Policies ◽  
Political Traditions ◽  
Liberal Market Economies ◽  
Market Environmentalism ◽  
Carbon Prices

This article aims to explain why market-based climate policies (carbon levies and emissions trading) have had limited success at the national level in “liberal-market economies” like Australia, Canada, and the United States. This situation is paradoxical to the extent that market environmentalism is often thought to be a concept tailored to the political traditions and policy paradigms in these states. I argue this occurs because precisely in such economies, workers have been the least protected from the market and the effects of globalization, leading to a squeeze on incomes and public services, and providing fertile ground for a virulently antitax politics. When coupled with the disproportionately carbon-intensive lifestyles in these states and the strength of fossil fuel interests, it becomes extremely easy and effective for opponents of climate policy to frame carbon prices as an onerous tax on workers and families. The article explores how this strategy has functioned at a discursive level and considers what this situation implies for climate policy advocates in carbon-intensive, neoliberal polities.

scholarly journals A computable general equilibrium analysis of environmental tax reform in Japan with a forward-looking dynamic model

2021 ◽  
Author(s):  
Shiro Takeda ◽  
Toshi H. Arimura
Keyword(s):  
General Equilibrium ◽  
Computable General Equilibrium ◽  
Tax Reform ◽  
Carbon Tax ◽  
Equilibrium Analysis ◽  
Corporate Taxes ◽  
Environmental Tax ◽  
Environmental Tax Reform ◽  
Lump Sum ◽  
Pure Carbon

AbstractThe Japanese government plans to reduce greenhouse gas emissions by 80% by 2050. However, it is not yet clear which policy measures the government will adopt to achieve this goal. In this regard, environmental tax reform, which is the combination of carbon regulation and the reduction of existing distortionary taxes, has attracted much attention. This paper examines the effects of an environmental tax reform in Japan. Using a dynamic computable general equilibrium (CGE) model, we analyze the quantitative impacts of an environmental tax reform and clarify which types of environmental tax reform are the most desirable. In the simulation, we introduce a carbon tax and consider the following four scenarios for the use of the carbon tax revenue: (1) a lump-sum rebate to the household, (2) a cut in income taxes, (3) a cut in corporate taxes and (4) a cut in consumption taxes. The first scenario is a pure carbon tax, and the other three scenarios are types of environmental tax reform. Our CGE simulation shows that (1) environmental tax reform tends to generate more desirable impacts than the pure carbon tax and that (2) the strong double dividend is obtained in some cases. In particular, we show that a cut in corporate taxes leads to the most desirable policy in terms of GDP and national income.

scholarly journals Impact of COVID-19 on the US and Texas Economy: A General Equilibrium Approach

2021 ◽  
Vol 16 (4) ◽  
pp. 697-713
Author(s):  
Lirong Liu ◽  
◽  
Steven Shwiff ◽  
Stephanie Shwiff ◽  
Maryfrances Miller ◽  
...  
Keyword(s):  
General Equilibrium ◽  
Computable General Equilibrium ◽  
National Level ◽  
Computable General Equilibrium Model ◽  
Food Services ◽  
The Us ◽  
State And Local ◽  
Current Impact ◽  
Quantitative Economics ◽  
The Impact

This paper examines the impact of COVID-19 on the US and Texas economy using a computable general equilibrium model, REMI PI+. We consider three scenarios based on economic forecasts from various sources, including the University of Michigan’s RSQE (Research Seminar in Quantitative Economics), IMF, and the Wi orld Bank. We report a GDP loss of $106 million (a 6% decline) with 1.2 million jobs lost (6.6%) in Texas in 2020. At the national level, GDP loss is $996 billion (a 5% decline) with 11.5 million jobs lost (5.5%) in the same year. By 2026, the aggregate total GDP loss in Texas ranges from $378 to $629 million. The estimated unemployment rate in Texas in 2021 ranges from 5% to 7.7%, depending on modeling assumptions. The granularity of the CGE results allow examination of the most and least impacted industries. Health Care and Social Assistance, Construction, and Accommodation and Food Services incur the most job loss while State and Local Government and Farm will likely see an increase in jobs for 2020. These insights separate our work from most current impact studies.

scholarly journals Globalisation or regionalism? States, markets and the structure of international trade

2002 ◽  
Vol 28 (3) ◽  
pp. 519-535 ◽  
Author(s):  
Theodore Pelagidis ◽  
Harry Papasotiriou
Keyword(s):  
International Trade ◽  
Global Economy ◽  
National Level ◽  
The United States ◽  
Market Forces ◽  
Weak States ◽  
Trading System ◽  
International Trading ◽  
Substantial Degree

The structure of international trade is determined not only by market forces, but also by the political objectives of states. Weak states participate least in the open international trading system. The strong states that do participate channel trade largely within regional trading blocks. The major states in Europe and East Asia have an incentive to diminish their dependence on the hegemonic power, that is, the United States, which has reacted with its own regionalism (NAFTA). Moreover, regionalism is interpreted as a strategy that reduces states' exposure to major shocks in the global economy. Additionally, it permits them to support weak sectors of their economies at a regional level without entirely undermining the long-term growth benefits of international trade, since a substantial degree of autarky is more feasible and efficient at a regional rather than at the national level.

scholarly journals THE ROLE OF BORDER CARBON ADJUSTMENTS IN A U.S. CARBON TAX

2018 ◽  
Vol 09 (01) ◽  
pp. 1840011 ◽  
Author(s):  
WARWICK J. MCKIBBIN ◽  
ADELE C. MORRIS ◽  
PETER J. WILCOXEN ◽  
WEIFENG LIU
Keyword(s):  
Computable General Equilibrium ◽  
Carbon Tax ◽  
Real Exchange Rates ◽  
The United States ◽  
Computable General Equilibrium Model ◽  
Carbon Taxes ◽  
Carbon Policy ◽  
Lump Sum ◽  
Net Exports ◽  
The Impact

This paper examines carbon tax design options in the United States using an intertemporal computable general equilibrium model of the world economy called G-Cubed. In this paper, we discuss four policy scenarios that explore two overarching issues: (1) the effects of a carbon tax under alternative assumptions about the use of the resulting revenue, and (2) the effects of a system of import charges on carbon-intensive goods (“border carbon adjustments” or BCAs). Consistent with earlier studies, we find that the carbon tax raises considerable revenue and reduces CO2 emissions significantly relative to baseline, no matter how the revenue is used. Gross annual revenue from the carbon tax with lump sum rebating and no BCA begins at $110 billion in 2020 and rises gradually to $170 billion in 2040. By 2040, annual CO2 emissions fall from 5.5 billion metric tons (BMT) under the baseline to 2.4 BMT, a decline of 3.1 BMT, or 57%. Cumulative emissions over 2020 to 2040 fall by 48 BMT. Also consistent with earlier studies, we find that the carbon tax has very small overall impacts on gross domestic product (GDP), wages, employment, and consumption. Different uses of the revenue from the carbon tax result in slightly different levels and compositions of GDP across consumption, investment and net exports. Overall, using carbon tax revenue to reduce the capital income tax rate results in better macroeconomic outcomes than using the revenue for lump sum transfers. Counter to their purported purpose of protecting U.S. trade strength, for a given revenue policy, BCAs tend to produce lower net exports than the carbon taxes alone. This is generally because the BCAs raise the value of the dollar relative to other currencies, thus lowering exports more than they lower imports. This is consistent with standard results in the international trade literature on the effects of import tariffs and export subsidies on real exchange rates, a result that is often overlooked in the discussion of domestic carbon policy. In a finding new to the literature, our results show that BCAs can have strikingly different effects depending on the use of the revenue. Under a lump sum rebate, BCAs exacerbate the impact of the carbon tax by lowering domestic output further than it would fall under the carbon tax alone. Under a capital tax swap, however, BCAs have a moderating effect: they reduce the impact of the tax on most industries.

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