Distributive Effects of the Introduction of a Tax to Fossil Fuel Demand

Héctor Manuel Bravo Pérez (), Juan Carlos Castro Ramírez () and Miguel Ángel Gutiérrez Andrade ()
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Héctor Manuel Bravo Pérez: Profesor, Facultad de Economía, UNAM. México, D.F. Mexico.
Juan Carlos Castro Ramírez: Profesor-investigador, Departamento de Economía, UAM-Iztapalapa. México, D.F. Mexico.
Miguel Ángel Gutiérrez Andrade: Profesor-investigador, Departamento de Ingeniería Eléctrica, UAM-Iztapalapa. México, D.F. Mexico.

Economía Mexicana NUEVA ÉPOCA, 2013, vol. XXII, issue 4, Cierre de época (II), 407-439

Abstract: This paper aims to verify if there is any effect in the income distribution for the Mexican economy when applying a tax on fossil fuels in order to reduce CO2 emissions. In order to reach this goal a computable general equilibrium model was built following the Shoven and Whalley method. It is observed that the application of a tax achieves a reduction in fossil fuel demand, but it does not have any meaningful consequence on the income redistribution of the society. All the levels of the economy have a loss in welfare as a consequence of the application of this tax.

Keywords: applied general equilibrium; environmental policy; fiscal policy; sustainability; climate change. (search for similar items in EconPapers)
JEL-codes: Q48 Q51 Q52 Q54 Q56 (search for similar items in EconPapers)
Date: 2013
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