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The Macroeconomic Effects of Carbon Taxes: The Role of Investment and Emission Rate Heterogeneity
We study the quantitative effects of a carbon tax in a dynamic, general equilibrium model with production heterogeneity and technology adoption. The vintage technology available to a firm determines its emission rate. Adopting newer technology is
subject to a non-convex adjustment cost that leads firms to have (S,s) policy functions for technology and capital adjustment. We show that firm heterogeneity in emission rates determines the aggregate effects of a carbon tax in the short- and long- run. GDP losses from a representative firm model are more than double those with heterogeneous emission rates. Short-run effects depend on the policy implementation.
Date:
1 March 2022, 13:15
Venue:
Seminar Room A or https://zoom.us/j/93987778529
Speaker:
Nora Traum (HEC Montréal)
Organising department:
Department of Economics
Part of:
Macroeconomics Seminar
Booking required?:
Not required
Audience:
Members of the University only
Editor:
Emma Heritage
