Welfare impacts of alternative biofuel and energy policies
Jingbo Cui (),
GianCarlo Moschini () and
Joseph Cooper ()
ISU General Staff Papers from Iowa State University, Department of Economics
We employ an open economy general equilibrium model to investigate the effects of government energy policy, with an emphasis on corn-based ethanol, on the U.S. economy. The model specification incorporates world and domestic markets, assumes pollution costs from fuel consumption, and allows endogenous determination of equilibrium quantities and prices for oil, corn and ethanol. The model is calibrated to represent a recent benchmark data set for 2009 and is used to simulate the positive and normative effects of alternative policies. We find that a second best policy of a fuel tax and ethanol subsidy approximates fairly closely the welfare gains associated with the first-best policy of an optimal carbon tax and tariffs on traded goods. The largest economic gains to the U.S. economy from these energy policies arise from the impact of the policies on U.S. terms of trade, particularly in the oil market. We also find that, conditional on the current fuel tax, an optimal ethanol mandate is superior to an optimal ethanol subsidy. In the benchmark case, the optimal ethanol mandate is about 18 billion gallons.
References: Add references at CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
https://lib.dr.iastate.edu/cgi/viewcontent.cgi?art ... on_las_workingpapers
Journal Article: Welfare Impacts of Alternative Biofuel and Energy Policies (2011)
Working Paper: Welfare Impacts of Alternative Biofuel and Energy Policies (2011)
Working Paper: Welfare impacts of alternative biofuel and energy policies (2010)
Working Paper: Welfare Impacts of Alternative Biofuel and Energy Policies (2010)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:isu:genstf:201006090700001089
Access Statistics for this paper
More papers in ISU General Staff Papers from Iowa State University, Department of Economics Iowa State University, Dept. of Economics, 260 Heady Hall, Ames, IA 50011-1070. Contact information at EDIRC.
Bibliographic data for series maintained by Curtis Balmer ().