Abstract
We show results from the National Energy Modeling System generated during the Energy Modeling Forum 32 study — focusing on macroeconomic responses to different methods of recycling carbon tax revenue. We find that recycling such revenue directly to consumers in the form of lump sum payments results in smaller negative GDP impacts than using the revenues to reduce business taxes.
Highlights
Under a policy that is expected to produce significant government revenues — such as a carbon tax — the way such revenues are used can play a critical role in determining the impacts on both the energy system and the broader economy
While detailed energy-sector models of the US can be used to understand the behavioral impacts of policies aimed at reducing carbon dioxide emissions on the energy system itself, economy-wide macroeconomic models are employed to understand the impacts of those policies on the broader economy
While energy prices appear to be the primary driver of differences in energy consumption across these four cases, revenue recycling seems to have a larger impact on economy-wide consumption, investment, and GDP: the two LS cases track each other closely and are distinct from the two DT cases
Summary
Under a policy that is expected to produce significant government revenues — such as a carbon tax — the way such revenues are used can play a critical role in determining the impacts on both the energy system and the broader economy. NEMS is a widely employed model of the US energy-economy that produces the Energy Information Administration’s (EIA’s) Annual Energy Outlook (AEO). EMF32 Results from NEMS feedback: while each module finds its own partial equilibrium solution that balances supplies with demands, the macroeconomic module provides a mechanism for incorporating economy-wide impacts of these solutions back into the other modules. The Macroeconomic Activity Module (MAM) links NEMS to the rest of the economy by providing projections of economic driver variables for use by the supply, demand, and conversion modules (U.S Energy Information Administration, 2016). The US model produces the key output variables used in this study It is a macroeconometric model: a system of estimated behavioral equations and identities (US Energy Information Administration, 2016). The model’s longer-run supply properties are based on standard growth theory, the model of Solow and Swan
Sign-in/Register to view highlights & summary Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
