| Autor: |
Belfiori, Elisa, Carroll, Daniel, Hur, Sewon |
| Předmět: |
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| Zdroj: |
Working Papers Series (Federal Reserve Bank of Dallas); Jul2024, Issue 2405, preceding p1-39, 40p |
| Abstrakt: |
We study climate policy in an economy with heterogeneous households, two types of goods (clean and dirty), and a climate externality from the dirty good. Using household expenditure and emissions data, we document that low-income households have higher emissions per dollar spent than high-income households, making a carbon tax regressive. We build a model that captures this fact and study climate policies that are neutral with respect to the income distribution. A central feature of these policies is that resource transfers across consumers are ruled out. We show that the constrained optimal carbon tax in a heterogeneous economy is heterogeneous: Higher-income households face a higher rate. Our main result shows that when the planner is limited to a uniform carbon tax, the tax follows the Pigouvian rule but is lower than the unconstrained carbon tax. Finally, we embed this model into a standard incomplete markets framework to quantify the policy effects on the economy, climate, and welfare, and we find a Pareto-improving result. The climate policy is welfare-improving for every consumer. [ABSTRACT FROM AUTHOR] |
| Databáze: |
Complementary Index |
| Externí odkaz: |
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