Emissions Targets and the Real Business Cycle: Intensity Targets versus Caps or Taxes

Carolyn Fischer and Michael R. Springborn

RFF Working Paper Series from Resources for the Future

Abstract: For reducing greenhouse gas emissions, intensity targets are attracting interest as a flexible mechanism that would better allow for economic growth than emissions caps. For the same expected emissions, however, the economic responses to unexpected productivity shocks differ. Using a real business cycle model, we find that a cap dampens the effects of productivity shocks in the economy on all variables except for the shadow value of the emissions constraint. An emissions tax leads to the same expected outcomes as a cap but with greater volatility. Certainty-equivalent intensity targets maintain higher levels of labor, capital, and output than other policies, with lower expected costs and no more volatility than with no policy.

Keywords: emissions tax; cap-and-trade; intensity target; business cycle (search for similar items in EconPapers)
JEL-codes: E32 H2 Q2 Q43 Q52 (search for similar items in EconPapers)
Date: 2011-04-29
New Economics Papers: this item is included in nep-dge, nep-ene and nep-env
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (203)

Downloads: (external link)
http://www.rff.org/RFF/documents/RFF-DP-09-47-REV.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://www.rff.org/RFF/documents/RFF-DP-09-47-REV.pdf [301 Moved Permanently]--> https://www.rff.org/RFF/documents/RFF-DP-09-47-REV.pdf)

Related works:
Journal Article: Emissions targets and the real business cycle: Intensity targets versus caps or taxes (2011)
Working Paper: Emissions Targets and the Real Business Cycle: Intensity Targets versus Caps or Taxes (2009)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:rff:dpaper:dp-09-47-rev

Access Statistics for this paper

More papers in RFF Working Paper Series from Resources for the Future Contact information at EDIRC.
Bibliographic data for series maintained by Resources for the Future ().