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    Making carbon taxation a generational win win

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    Date Issued
    2021-02
    Publisher Version
    10.1111/iere.12483
    Author(s)
    Kotlikoff, Laurence
    Kubler, Felix
    Polbin, Andrey
    Sachs, Jeffrey
    Scheidegger, Simon
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    Permanent Link
    https://hdl.handle.net/2144/42421
    OA Version
    Published version
    Citation (published version)
    Laurence Kotlikoff, Felix Kubler, Andrey Polbin, Jeffrey Sachs, Simon Scheidegger. 2021. "MAKING CARBON TAXATION A GENERATIONAL WIN WIN." International Economic Review, Volume 62, Issue 1, pp. 3 - 46. https://doi.org/10.1111/iere.12483
    Abstract
    Carbon taxation is mostly studied in social planner or infinitely lived-agent models, which obscure carbon taxation’s potential to produce a generational win win. This article’s large-scale, dynamic 55-period, overlap- ping generations model calculates the carbon tax policy delivering the highest uniform welfare gain to all current and future generations. Our model features coal, oil, and gas, increasing extraction costs, clean energy, technical and demographic change, and Nordhaus’ carbon/temperature/damage functions. Assuming high-end carbon damages, the optimal carbon tax is $70, rising annually at 1.5%. This policy raises all generations’ welfare by almost 5%. However, doing so requires major intergenerational redistribution.
    Rights
    © 2019 by Laurence J. Kotlikoff, Felix Kubler, Andrey Polbin, Jeffrey D. Sachs, and Simon Scheidegger. All rights reserved. Short sections of text, not to exceed two paragraphs, may be quoted without explicit permission provided that full credit, including © notice, is given to the source.
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    • CAS: Economics: Scholarly Papers [271]
    • BU Open Access Articles [4833]


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