This study evaluates the distributional implications of a carbon dioxide emissions tax on household welfare, through changes in the prices of the consumer basket. To achieve this, the results of a Computable General Equilibrium (CGE) model are sequentially integrated with a household-level analysis based on microsimulation models (MSM). Additionally, the study compares the effects of using arithmetic versus behavioral MSM approaches.
The results show that the carbon tax has negative effects on the welfare of all population groups, with higher-income households being the most affected and middle-income households the least affected. Finally, the paper presents a set of policy recommendations aimed at achieving the desired effects in both emission reduction and the integration of welfare considerations into mitigation measures.
Authors:
Germán Romero
Andrés Álvarez-Espinosa
Silvia Calderón
Alejandro Ordóñez
Document link:
https://revistas.udea.edu.co/index.php/lecturasdeeconomia/article/view/329189/20790256
