The effectiveness of taxing the carbon content of energy consumption

Suphi Sen and Herman R.J. Vollebergh

Journal of Environmental Economics and Management, 2018, vol. 92, issue C, 74-99

Abstract: We estimate the long-run effect of a broad-based carbon tax on energy consumption by using a new and unique cross-sectional dataset of effective energy tax rates of OECD countries. Our instrumental variables estimations, which exploit the positive correlation between the tax rates of neighboring countries, indicate a much higher effectiveness for carbon taxation than those from ordinary least square estimations. The validity of our identification strategy is consistent with the theories of strategic policy interaction in the presence of immobile tax bases. Our results show that a one euro increase in energy taxes reduces carbon emissions from fossil fuel consumption by 0.73 percent in the long run.

Keywords: Effective tax rates; Energy taxation; Energy consumption; Carbon dioxide emissions; IV estimation (search for similar items in EconPapers)
JEL-codes: C26 H23 Q41 Q48 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (28)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0095069616301759
Full text for ScienceDirect subscribers only

Related works:
Working Paper: The effectiveness of taxing the carbon content of energy consumption (2018)
Working Paper: The Effectiveness of Taxing Carbon Content of Energy Consumption (2016)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jeeman:v:92:y:2018:i:c:p:74-99

DOI: 10.1016/j.jeem.2018.08.017

Access Statistics for this article

Journal of Environmental Economics and Management is currently edited by M.A. Cole, A. Lange, D.J. Phaneuf, D. Popp, M.J. Roberts, M.D. Smith, C. Timmins, Q. Weninger and A.J. Yates

More articles in Journal of Environmental Economics and Management from Elsevier
Bibliographic data for series maintained by Catherine Liu ().