Analytical general equilibrium effects of energy policy on output and factor prices

Don Fullerton, Garth Heutel

Research output: Contribution to journalArticlepeer-review

Abstract

Using an analytical general equilibrium model, we find solutions for the effect of energy policy on factor prices as well as output prices. We calibrate the model to the U.S. economy, and we consider a tax on carbon dioxide. By looking at expenditure and income patterns across household groups, we quantify the uses-side and sources-side incidence of the tax. When households are categorized either by annual income or by total annual consumption as a proxy for permanent income, the uses-side incidence is regressive. This result is robust to sensitivity analysis over various parameter values. The sources-side incidence can be progressive, U-shaped, or regressive. Results on the sources side are sensitive to parameter values.

Original languageEnglish (US)
Article number15
JournalB.E. Journal of Economic Analysis and Policy
Volume10
Issue number2
DOIs
StatePublished - 2011

Keywords

  • climate policy
  • incidence
  • relative burdens
  • sources-side
  • uses-side

ASJC Scopus subject areas

  • Economics and Econometrics
  • Economics, Econometrics and Finance (miscellaneous)

Fingerprint Dive into the research topics of 'Analytical general equilibrium effects of energy policy on output and factor prices'. Together they form a unique fingerprint.

Cite this