Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/252097 
Year of Publication: 
2022
Series/Report no.: 
CESifo Working Paper No. 9580
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
I build a quantitative model of economic growth that can be used to evaluate the impact of environmental policy interventions on final-use energy consumption, an important driver of carbon emissions. In the model, energy demand is driven by directed technical change. Energy supply is subject to increasing extraction costs. The model is consistent with aggregate evidence on energy use, efficiency, and prices in the United States, as well as the standard balanced growth facts. I use the model to conduct several policy analyses. First, I examine the impact of energy taxes and compare the results to the standard Cobb-Douglas approach used in the environmental macroeconomics literature. Second, I investigate how the government can use energy taxes and R&D policy to implement the least-cost path that achieves an environmental target. Finally, I study the dynamic impacts of exogenous improvements in energy efficiency and R&D subsidies for energy efficiency, focusing on the role of rebound. All analyses highlight the importance of transition dynamics.
Subjects: 
energy
climate change
directed technical change
growth
JEL: 
H23
O33
O44
Q43
Q55
Document Type: 
Working Paper
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