EU carbon border tax: General equilibrium effects on income and emissions

Javier Flórez Mendoza (), Oliver Reiter and Robert Stehrer

No 254, wiiw Working Papers from The Vienna Institute for International Economic Studies, wiiw

Abstract: This paper employs a quantitative trade model to globally assess the implications of the EU carbon border adjustment mechanism (CBAM) on trade flows, welfare, real wages and CO2 emissions. We quantify the general equilibrium effects on EU members and non-members under various carbon tax prices, including a sector-level composition, and also compare the results to a scenario including export rebates. For the EU, we find an increase in the terms of trade and, consequently, small positive welfare effects, although there are tiny negative effects on real wages. Non-EU countries face a decline in the terms of trade and a small welfare loss as well as marginally declining real wages. Global CO2 emissions are marginally reduced, but they slightly increase in the EU due to specialisation effects.

Keywords: New quantitative trade model; carbon border adjustment mechanism (CBAM); trade policy welfare; CO2 emissions (search for similar items in EconPapers)
JEL-codes: F11 F13 F14 F18 Q56 (search for similar items in EconPapers)
Pages: 85 pages including 11 Table and 36 Figures
Date: 2024-11
References: View references in EconPapers View complete reference list from CitEc
Citations:

Published as wiiw Working Paper

Downloads: (external link)
https://wiiw.ac.at/eu-carbon-border-tax-general-eq ... issions-dlp-7073.pdf (application/pdf)

Related works:
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:wii:wpaper:254

Ordering information: This working paper can be ordered from
https://wiiw.ac.at

Access Statistics for this paper

More papers in wiiw Working Papers from The Vienna Institute for International Economic Studies, wiiw Contact information at EDIRC.
Bibliographic data for series maintained by Customer service ().