Abstract
A carbon tax can induce innovation in green technologies. I evaluate the quantitative impact of this channel in a dynamic, general equilibrium model with endogenous innovation in fossil, green, and nonenergy inputs. I discipline the parameters using evidence from historical oil shocks, after which both energy prices and energy innovation increased substantially. I find that a carbon tax induces large changes in innovation. This innovation response increases the effectiveness of the policy at reducing emissions, resulting in a 19.2 percent decrease in the size of the carbon tax required to reduce emissions by 30 percent in 20 years.
Original language | English (US) |
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Pages (from-to) | 90-118 |
Number of pages | 29 |
Journal | American Economic Journal: Macroeconomics |
Volume | 10 |
Issue number | 1 |
DOIs | |
State | Published - Jan 1 2018 |
ASJC Scopus subject areas
- Economics, Econometrics and Finance(all)
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Dive into the research topics of 'Climate policy and innovation: A quantitative macroeconomic analysis'. Together they form a unique fingerprint.Datasets
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Replication data for: Climate Policy and Innovation: A Quantitative Macroeconomic Analysis
Fried, S. (Creator), ICPSR - Interuniversity Consortium for Political and Social Research, 2018
DOI: 10.3886/e116407, https://www.openicpsr.org/openicpsr/project/116407
Dataset
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Replication data for: Climate Policy and Innovation: A Quantitative Macroeconomic Analysis
Fried, S. (Creator), ICPSR, 2018
DOI: 10.3886/e116407v1, https://www.openicpsr.org/openicpsr/project/116407/version/V1/view
Dataset