Aggregate and distributional effects of a carbon

Christian.Probstin ()
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Christian.Probstin: KU Leuven

No 460, Working Paper Research from National Bank of Belgium

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, affectingtop earners the most, and leads to job cuts in capital goods-producing industries that employ high-income earners. over time the tax incidence flattens.

Keywords: carbon tax; putty-clay; input-output linkages; Income Distribution (search for similar items in EconPapers)
JEL-codes: D57 E62 Q52 (search for similar items in EconPapers)
Pages: 109 pages
Date: 2024-10
New Economics Papers: this item is included in nep-ene and nep-env
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Persistent link: https://EconPapers.repec.org/RePEc:nbb:reswpp:202410-460

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