Effects of Carbon Pricing on Inflation

Richhild Moessner

No 9563, CESifo Working Paper Series from CESifo

Abstract: We study how carbon pricing has affected inflation ex-post, using dynamic panel estimation of New-Keynesian Phillips curves for 35 OECD economies from 1995 to 2020. As carbon pricing we consider prices of emissions trading systems (ETS) and carbon taxes. We find that an increase in prices of ETS by $10 per ton of CO2 equivalents increases energy CPI inflation by 0.8 percentage points (pp), and headline inflation by 0.08pp, but has no significant effects on food and core CPI inflation. We also find that an increase in carbon taxes by $10 per ton of CO2 equivalents increases food CPI inflation by 0.1pp, but has no significant effects on energy CPI inflation, headline and core CPI inflation.

Keywords: climate policies; carbon tax; carbon emission trading system; climate change; inflation (search for similar items in EconPapers)
JEL-codes: E31 E52 E58 Q48 Q58 (search for similar items in EconPapers)
Date: 2022
New Economics Papers: this item is included in nep-ene, nep-env, nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (22)

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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_9563

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