Welfare Analysis of an Optimal Carbon Tax in Chile

Espinosa, Cristian; Fornero, Jorge

dc.creator	Espinosa, Cristian
dc.creator	Fornero, Jorge
dc.date	2014-11-03
dc.date.accessioned	2023-09-07T16:20:12Z
dc.date.available	2023-09-07T16:20:12Z
dc.identifier	https://www.rae-ear.org/index.php/rae/article/view/413
dc.identifier.uri	https://revistaschilenas.uchile.cl/handle/2250/233559
dc.description	We analyze a dynamic stochastic general equilibrium model which includes a negative externality that arises from fossil fuels burning. The carbon released to the atmosphere by electricity producers is the main driver of climate change. We adapt the optimal tax derived by Golosov et al. (2011) to a small open economy to force polluters to internalize their damages. The results show that the tax benefits outweigh their costs; yet welfare gains seem to be marginal under plausible parameters. We calculate the optimal carbon tax for Chile and the tax effectiveness achieved, which is around 10 percent. The results remain robust to variations in the utility function, changes in parameters that determine the externality and alternative degrees of commitment to reduce emissions.	es-ES
dc.description	We analyze a dynamic stochastic general equilibrium model which includes a negative externality that arises from fossil fuels burning. The carbon released to the atmosphere by electricity producers is the main driver of climate change. We adapt the optimal tax derived by Golosov et al. (2011) to a small open economy to force polluters to internalize their damages. The results show that the tax benefits outweigh their costs; yet welfare gains seem to be marginal under plausible parameters. We calculate the optimal carbon tax for Chile and the tax effectiveness achieved, which is around 10 percent. The results remain robust to variations in the utility function, changes in parameters that determine the externality and alternative degrees of commitment to reduce emissions.	en-US
dc.format	application/pdf
dc.language	eng
dc.publisher	Universidad Alberto Hurtado - Facultad de Economía y Negocios	en-US
dc.relation	https://www.rae-ear.org/index.php/rae/article/view/413/558
dc.source	Revista de Análisis Económico ; Vol. 29 Núm. 2 (2014); 75-112	es-ES
dc.source	Economic Analysis Review; Vol. 29 No. 2 (2014); 75-112	en-US
dc.source	0718-8870
dc.source	0716-5927
dc.subject	DSGE	en-US
dc.subject	climate change	en-US
dc.subject	CO2 emissions	en-US
dc.subject	optimal taxation	en-US
dc.subject	carbon tax.	en-US
dc.subject	DSGE	es-ES
dc.subject	climate change	es-ES
dc.subject	CO2 emissions	es-ES
dc.subject	optimal taxation	es-ES
dc.subject	carbon tax.	es-ES
dc.title	Welfare Analysis of an Optimal Carbon Tax in Chile	es-ES
dc.title	Welfare Analysis of an Optimal Carbon Tax in Chile	en-US
dc.type	info:eu-repo/semantics/article
dc.type	info:eu-repo/semantics/publishedVersion

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