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Combining input-output analysis and micro-simulation to assess the effects of carbon taxation on Spanish households

Xavier Labandeira () and Jose Labeaga

Fiscal Studies, 1999, vol. 20, issue 3, 305-320

Abstract: This paper explores the effects of a tax levied on Spanish energy-related CO2 emissions. After justifying the relevance of carbon taxation in the Spanish context, we consider the introduction of a product (fossil-fuel) tax with a rate obtained through the ‘actual damage cost’ method. Our empirical analysis proceeds in two stages. First, we employ an input-output demand model to calculate the price changes after the introduction of carbon taxation. In a second stage, simulation with Spanish household micro-data for 1994 yields the environmental and economic effects of a Spanish carbon tax. We find a limited short-run reaction to the carbon tax, which hampers its environmental success. The carbon tax burden is, however, significant, with a proportional distribution across households.

JEL-codes: C33 C67 H31 Q28 (search for similar items in EconPapers)
Date: 1999
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