TY  - RPRT
A1  - Blanz, Alkis
A1  - Eydam, Ulrich
A1  - Heinemann, Maik
A1  - Kalkuhl, Matthias
T1  - Optimal carbon pricing with fluctuating energy prices — emission targeting vs. price targeting
T2  - CEPA Discussion Papers
N2  - Prices of primary energy commodities display marked fluctuations over time. Market-based climate policy instruments (e.g., emissions pricing) create incentives to reduce energy consumption by increasing the user cost of fossil energy. This raises the question of whether climate policy should respond to fluctuations in fossil energy prices? We study this question within an environmental dynamic stochastic general equilibrium (E-DSGE) model calibrated on the German economy. Our results indicate that the welfare implications of dynamic emissions pricing crucially depend on how the revenues are used. When revenues are fully absorbed, a reduction in emissions prices stabilizes the economy in response to energy price shocks. However, when revenues are at least partially recycled, a stable emissions price improves overall welfare. This result is robust to different modeling assumptions.
T3  - CEPA Discussion Papers - 51 
KW  - energy prices
KW  - E-DSGE
KW  - climate policy
KW  - welfare
Y1  - 2022
U6  - http://nbn-resolving.de/urn/resolver.pl?urn:nbn:de:kobv:517-opus4-561049
SN  - 2628-653X
IS  - 51
ER  - 
TY  - RPRT
A1  - Blanz, Alkis
A1  - Eydam, Ulrich
A1  - Heinemann, Maik
A1  - Kalkuhl, Matthias
A1  - Moretti, Nikolaj
T1  - Fiscal Policy and Energy Price Shocks
T2  - CEPA Discussion Papers
N2  - The effects of energy price increases are heterogeneous between households and firms. Financially constrained poorer households, who spend a larger relative share of their income on energy, are particularly affected. In this analysis, we examine the macroeconomic and welfare effects of energy price shocks in the presence of credit-constrained households that have subsistence-level energy demand. Within a Dynamic Stochastic General Equilibrium (DSGE) model calibrated for the German economy, we compare the performance of different policy measures (transfers and energy subsidies) and different financing schemes (income tax vs. debt). Our results show that credit-constrained households prefer debt over tax financing regardless of the compensation measure due to their difficulty to smooth consumption. On the contrary, rich households tend to prefer tax-financed measures as they increase the labor supply of poor households. From an aggregate perspective, tax-financed measures targeting firms effectively cushion aggregate output losses.
T3  - CEPA Discussion Papers - 70 
KW  - energy prices
KW  - E-DSGE
KW  - fiscal policy
KW  - welfare
Y1  - 2023
U6  - http://nbn-resolving.de/urn/resolver.pl?urn:nbn:de:kobv:517-opus4-612763
SN  - 2628-653X
IS  - 70
ER  - 
TY  - RPRT
A1  - Eydam, Ulrich
A1  - Diluiso, Francesca
T1  - How to Redistribute the Revenues from Climate Policy?
BT  - A Dynamic Perspective with Financially Constrained Households
T2  - CEPA Discussion Papers
N2  - In light of climate change mitigation efforts, revenues from climate policies are growing, with no consensus yet on how they should be used. Potential efficiency gains from reducing distortionary taxes and the distributional implications of different revenue recycling schemes are currently debated. To account for households heterogeneity and dynamic trade-offs, we study the macroeconomic and welfare performance of different revenue recycling schemes using an Environmental Two-Agent New-Keynesian model, calibrated on the German economy. We find that, in the long run, welfare gains are higher when revenues are used to reduce distortionary taxes on capital, but this comes at the cost of higher inequality: while all households prefer labor income tax reductions to lump-sum transfers, only financially unconstrained households are better off when reducing taxes on capital income. Interestingly, we find that over the transition period relevant to meet short-medium run climate targets, labor income tax cuts are the most efficient and equitable instrument.
T3  - CEPA Discussion Papers - 45 
KW  - double dividend
KW  - E-DSGE
KW  - environmental tax reform
KW  - non-Ricardian households
KW  - revenue recycling
Y1  - 2022
U6  - http://nbn-resolving.de/urn/resolver.pl?urn:nbn:de:kobv:517-opus4-548960
SN  - 2628-653X
IS  - 45
ER  -