Conference Agenda
Overview and details of the sessions of this conference. Please select a date or location to show only sessions at that day or location. Please select a single session for detailed view (with abstracts and downloads if available).
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Daily Overview |
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Climate Policy 4 Location: B127 Session Chair: David Comerford, University of Strathclyde | |
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Carbon Taxes versus Cap-and-Trade under Uncertainty Shocks 1: Statistics Norway; 2: Norwegian University of Life Sciences This paper compares dynamic outcomes under a carbon tax and an emissions cap when the economy is hit by productivity uncertainty shocks in a two-sector New Keynesian setting. It shows that price and quantity instruments cease to be close substitutes once abatement is costly to adjust, with consequences for both volatility and welfare. The main results are: (i) compared to a tax, the quantity instrument yields lower volatility and higher welfare under dirty-sector productivity uncertainty, but higher volatility and lower welfare under clean-sector uncertainty; (ii) the magnitude of the volatility and welfare gaps is governed by the ease of adjusting abatement; and (iii) the two policies are otherwise close substitutes when abatement is freely adjustable, with taxes and caps generating near-identical aggregate dynamics and differing substantially only on the emissions and abatement margins. | |