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Unilateral climate policy and optimal containment in an open economy

Csordás, Stefan and Krysiak, Frank C.. (2009) Unilateral climate policy and optimal containment in an open economy. WWZ Discussion Papers, 2009 (02).

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Official URL: https://edoc.unibas.ch/61459/

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Abstract

In the absence of a broad international agreement, national climate policies NEWLINE are less efficient, due to carbon leakage, and more costly, due to causing NEWLINE unemployment and a loss of competitiveness on international markets. As, NEWLINE in many countries, a substantial fraction of emissions results from the production NEWLINE of intermediate goods, such as electricity or transportation services, NEWLINE we investigate whether the above negative side-effects can be addressed by NEWLINE a policy mix that (partially) contains the effects of climate policy to the intermediate NEWLINE goods sector. We use a four-sector general equilibrium model to NEWLINE study a policy mix that consists of taxing emissions and subsidizing the intermediate NEWLINE good. We show that such containment is a second-best approach NEWLINE to combat carbon leakage and to maintain a favorable international market NEWLINE position. Also, it can help to reduce climate-policy-induced unemployment.
Faculties and Departments:06 Faculty of Business and Economics > Departement Wirtschaftswissenschaften > Professuren Wirtschaftswissenschaften > Umweltökonomie (Krysiak)
12 Special Collections > WWZ Publications > WWZ Discussion Papers and Working Papers
UniBasel Contributors:Krysiak, Frank Christian and Csordàs, Stefan
Item Type:Working Paper
Publisher:WWZ, University of Basel
Number of Pages:29
Note:Publication type according to Uni Basel Research Database: Discussion paper / Internet publication
Language:English
Identification Number:
  • handle: RePEc:bsl:wpaper:2009/02
Last Modified:09 Mar 2018 10:53
Deposited On:08 Mar 2018 08:33

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