Unilateral climate policy and optimal containtment in an open economy

Arbeitspapier

In the absence of a broad international agreement, national climate policies are less efficient, due to carbon leakage, and more costly, due to causing unemployment and a loss of competitiveness on international markets. As, in many countries, a substantial fraction of emissions results from the production of intermediate goods, such as electricity or transportation services, we investigate whether the above negative side-effects can be addressed by a policy mix that (partially) contains the effects of climate policy to the intermediate goods sector. We use a four-sector general equilibrium model to study a policy mix that consists of taxing emissions and subsidizing the intermediate good. We show that such containment is a second-best approach to combat carbon leakage and to maintain a favorable international market position. Also, it can help to reduce climate-policy-induced unemployment.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: WWZ Discussion Paper ; No. 02/09

Classification and Topics

• Classification: Wirtschaft
• Subject: Ökosteuer ; Subvention ; Vorleistungen ; Policy-Mix ; Allgemeines Gleichgewicht ; Offene Volkswirtschaft ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Krysiak, Frank ; Csordás, Stefan
• Event: Veröffentlichung
• (who): University of Basel, Center of Business and Economics (WWZ)
• (where): Basel
• (when): 2009

Further information

• DOI: doi:10.5451/unibas-ep61459
• Handle: http://hdl.handle.net/10419/123399
• Last update: 10.03.2025, 11:44 AM CET