Microsimulating the Effects of Household Energy Price Changes in Spain

Miguel Rodriguez and Jose Labeaga

No 2004.161, Working Papers from Fondazione Eni Enrico Mattei

Abstract: In this paper we present a microsimulation model to calculate the effects of hypothetical ex-ante price changes in the Spanish energy domain. The model rests on our prior estimation of a demand system which is especially designed for simultaneous analysis of different energy goods and uses household data from 1973 to 1995. Our objective is to obtain in depth information on the behavioural responses by different types of households, which will allow us to determine the welfare effects of such price changes, their distribution across society and the environmental consequences within the residential sector. Although the model used is able to reproduce any type of price change, we illustrate the paper with an actual simulation of the effects of energy taxes that resemble a 50 Euro tax on CO2 (carbon dioxide) emissions. The results show a significant response by households, sizeable emission reductions, tax revenues, welfare changes and distributional effects. The simulated policy can thus be considered a feasible option to tackle some of the current and severe inefficiencies in Spanish energy and environmental domains.

Keywords: In this paper we present a microsimulation model to calculate the effects of hypothetical ex-ante price changes in the Spanish energy domain. The model rests on our prior estimation of a demand system which is especially designed for simultaneous analysis of different energy goods and uses household data from 1973 to 1995. Our objective is to obtain in depth information on the behavioural responses by different types of households; which will allow us to determine the welfare effects of such price changes; their distribution across society and the environmental consequences within the residential sector. Although the model used is able to reproduce any type of price change; we illustrate the paper with an actual simulation of the effects of energy taxes that resemble a 50 Euro tax on CO2 (carbon dioxide) emissions. The results show a significant response by households; sizeable emission reductions; tax revenues; welfare changes and distributional effects. The simulated policy can thus be considered a feasible option to tackle some of the current and severe inefficiencies in Spanish energy and environmental domains. (search for similar items in EconPapers)
JEL-codes: C33 H23 H31 (search for similar items in EconPapers)
Date: 2004-12
New Economics Papers: this item is included in nep-ene and nep-pbe
References: Add references at CitEc
Citations: View citations in EconPapers (6)

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