Title: A panel SVAR for European climate policy
Authors: Simone Maxand - Humboldt-Universitaet zu Berlin (Germany) [presenting]
Abstract: As manifested in international climate agreements, governments worldwide work on the implementation of economically and socially accepted policies to cut down carbon emissions. With a special focus on Europe, structures as the European trading system and individually set carbon prices should provide tools for limiting emissions. A few recent studies empirically address the effectiveness and consequences of implemented carbon taxes. Along with these studies, we follow previous work and evaluate the effect of European carbon taxes on GDP and employment. Model-wise we stay in a similar frame, but apply a newly developed panel SVAR model identified by a combination of non-Gaussianity and narrative restrictions on the structural shocks. In contrast to the original study, we can identify a significant impact of the carbon tax on GDP and employment in the medium term. We additionally present future directions on how this model provides a system view on the effects of environmental taxes in general.