Abstract
We estimate the long-run effect of a broad-based carbon tax on energy consumption by using a new and unique cross-sectional dataset of effective energy tax rates of OECD countries. Our instrumental variables estimations, which exploit the positive correlation between the tax rates of neighboring countries, indicate a much higher effectiveness for carbon taxation than those from ordinary least square estimations. The validity of our identification strategy is consistent with the theories of strategic policy interaction in the presence of immobile tax bases. Our results show that a one euro increase in energy taxes reduces carbon emissions from fossil fuel consumption by 0.73 percent in the long run. (C) 2018 Elsevier Inc. All rights reserved.
| Original language | English |
|---|---|
| Pages (from-to) | 74-99 |
| Journal | Journal of Environmental Economics and Management |
| Volume | 92 |
| DOIs | |
| Publication status | Published - Nov 2018 |
Keywords
- Effective tax rates
- Energy taxation
- Energy consumption
- Carbon dioxide emissions
- IV estimation
- HOUSEHOLD GASOLINE DEMAND
- STRATEGIC INTERACTION
- PRICE ELASTICITY
- TAXES
- METAANALYSIS
- COMPETITION
- REGRESSION
- POLICY
Cite this
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The effectiveness of taxing the carbon content of energy consumption. / Sen, Suphi; Vollebergh, Herman.
In: Journal of Environmental Economics and Management, Vol. 92, 11.2018, p. 74-99.Research output: Contribution to journal › Article › Scientific › peer-review
TY - JOUR
T1 - The effectiveness of taxing the carbon content of energy consumption
AU - Sen, Suphi
AU - Vollebergh, Herman
PY - 2018/11
Y1 - 2018/11
N2 - We estimate the long-run effect of a broad-based carbon tax on energy consumption by using a new and unique cross-sectional dataset of effective energy tax rates of OECD countries. Our instrumental variables estimations, which exploit the positive correlation between the tax rates of neighboring countries, indicate a much higher effectiveness for carbon taxation than those from ordinary least square estimations. The validity of our identification strategy is consistent with the theories of strategic policy interaction in the presence of immobile tax bases. Our results show that a one euro increase in energy taxes reduces carbon emissions from fossil fuel consumption by 0.73 percent in the long run. (C) 2018 Elsevier Inc. All rights reserved.
AB - We estimate the long-run effect of a broad-based carbon tax on energy consumption by using a new and unique cross-sectional dataset of effective energy tax rates of OECD countries. Our instrumental variables estimations, which exploit the positive correlation between the tax rates of neighboring countries, indicate a much higher effectiveness for carbon taxation than those from ordinary least square estimations. The validity of our identification strategy is consistent with the theories of strategic policy interaction in the presence of immobile tax bases. Our results show that a one euro increase in energy taxes reduces carbon emissions from fossil fuel consumption by 0.73 percent in the long run. (C) 2018 Elsevier Inc. All rights reserved.
KW - Effective tax rates
KW - Energy taxation
KW - Energy consumption
KW - Carbon dioxide emissions
KW - IV estimation
KW - HOUSEHOLD GASOLINE DEMAND
KW - STRATEGIC INTERACTION
KW - PRICE ELASTICITY
KW - TAXES
KW - METAANALYSIS
KW - COMPETITION
KW - REGRESSION
KW - POLICY
U2 - 10.1016/j.jeem.2018.08.017
DO - 10.1016/j.jeem.2018.08.017
M3 - Article
VL - 92
SP - 74
EP - 99
JO - Journal of Environmental Economics and Management
JF - Journal of Environmental Economics and Management
SN - 0095-0696
ER -