General Equilibrium Impacts of a Federal Clean Energy Standard

Lawrence H. Goulder, Marc Hafstead and Roberton Williams

American Economic Journal: Economic Policy, 2016, vol. 8, issue 2, 186-218

Abstract: Economists have tended to view emissions pricing (e.g., cap and trade or a carbon tax) as the most cost-effective approach to reducing greenhouse gas emissions. This paper offers a different view. Employing analytical and numerically solved general equilibrium models, it provides plausible conditions under which a more conventional form of regulation—namely, the use of a clean energy standard (CES)—is more cost-effective. The models reveal that the CES distorts factor markets less because it is a smaller implicit tax on factors of production. This advantage more than offsets the disadvantages of the CES when minor emissions reductions are involved. (JEL H23, Q42, Q48, Q54, Q58)

JEL-codes: H23 Q42 Q48 Q54 Q58 (search for similar items in EconPapers)
Date: 2016
Note: DOI: 10.1257/pol.20140011
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Citations: View citations in EconPapers (70)

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Working Paper: General Equilibrium Impacts of a Federal Clean Energy Standard (2014)
Working Paper: General Equilibrium Impacts of a Federal Clean Energy Standard (2014)
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