Measuring the Macroeconomic Impact of Carbon Taxes
Using new data on European carbon taxes, Gilbert Metcalf and James Stock find that there is no robust evidence of a negative effect on employment or GDP growth from carbon pricing.
Policymakers often express concern about the impact of carbon taxes on employment or GDP. Using a new data set on carbon tax rates, we estimate the macroeconomic impacts of these taxes on GDP and employment growth rates for various specifications and samples. Our point estimates suggest a zero to modest positive impact on GDP and total employment growth rates. More importantly, we find no robust evidence of a negative effect of the tax on employment or GDP growth. For the European experience, at least, we find no support for the view that carbon taxes are job or growth killers.
Gilbert E. Metcalf
Gilbert E. Metcalf is a university fellow at RFF. His current research focuses on policy evaluation and design in the area of energy and climate change.
Harold Hitchings Burbank Professor of Political Economy, Harvard University
Common Resources — Aug 10, 2022
California Cap and Trade Explained
California’s cap-and-trade program limits carbon emissions, creates a market for tradable emissions credits, and funds decarbonization projects. The program’s history, successes, and lessons learned can help similar programs elsewhere succeed.
On the Issues — Jul 22, 2022
On the Issues: Carbon Offsets, Sweet and Sour Oils, and More
A biweekly newsletter connecting global current events, pressing climate and energy policy news, and economics research from RFF scholars. This week: carbon offsets, sweet and sour oils, and more.