Energy Taxes and Oil Price Shocks

Helmuth Cremer, Firouz Gahvari and Norbert Ladoux ()

The B.E. Journal of Economic Analysis & Policy, 2015, vol. 15, issue 2, 475-501

Abstract: This paper examines if an energy price shock should be compensated by a reduction in energy taxes to mitigate its impact on consumer prices. It shows that the consumer price should not increase by as much as the producer price, implying a small reduction in the energy tax in dollars. The energy tax rate, on the other hand, decreases sharply. This decline is primarily due to an adjustment in the Pigouvian component: A constant marginal social damage being divided by a higher producer price. The redistributive component of the tax remains at about 10% of the social cost of energy.

Keywords: oil price shock; energy tax; Pigouvian tax; redistributive concerns (search for similar items in EconPapers)
JEL-codes: H21 H23 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (2)

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Related works:
Working Paper: Energy taxes and oil price shock (2011)
Working Paper: Energy taxes and oil price shock (2011)
Working Paper: Energy taxes and oil price shocks (2011)
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DOI: 10.1515/bejeap-2014-0098

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