Journal
INTERNATIONAL TAX AND PUBLIC FINANCE
Volume 23, Issue 4, Pages 607-639Publisher
SPRINGER
DOI: 10.1007/s10797-016-9405-4
Keywords
Environmental policy stringency; Climate policy stringency; Shadow price; Energy price; Pollution haven effect; Carbon leakage
Categories
Funding
- German Federal Ministry for Education and Research (BMBF) in the framework of the project Climate Policy and the Growth Pattern of Nations
- BMBF priority funding Economics of Climate Change
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To assess the effect of environmental policy on production structures, trade structures, or foreign direct investment, a measure for the stringency of policy is necessary. Measures typically used in empirical studies share several disadvantages: they are not available on a sectoral basis to reflect concerns of industry competitiveness; they are not available for a wide range of countries to allow for international comparisons; or they are not broad enough to reflect the multidimensionality of environmental policy. This paper develops a thorough, internationally comparable, sector-specific measure of multidimensional climate policy stringency where a shadow price approach serves as a basis. The approach is applied to climate policy by determining sector-specific emission-relevant energy costs on the basis of the sectors' usage of emission-relevant energy carriers and the carriers' respective prices. The resulting shadow price estimates are heterogeneous and can be applied in future research to test for carbon leakage and pollution havens.
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