1887

OECD Economics Department Working Papers

Working papers from the Economics Department of the OECD that cover the full range of the Department’s work including the economic situation, policy analysis and projections; fiscal policy, public expenditure and taxation; and structural issues including ageing, growth and productivity, migration, environment, human capital, housing, trade and investment, labour markets, regulatory reform, competition, health, and other issues.

The views expressed in these papers are those of the author(s) and do not necessarily reflect those of the OECD or of the governments of its member countries.

English, French

Macroeconomic and distributional consequences of net zero policies in the United Kingdom

This paper presents new simulation results for the UK combining macroeconomic simulations in ThreeME, a computable general equilibrium model, with household-level micro-simulations with the aim to provide consistent estimates of macroeconomic and distributional consequences of policy action to curb greenhouse gas emissions. One main and overarching result is that if an economy-wide and significant carbon price is introduced it leads to large emission reductions. Macroeconomic and distributional consequences are very limited in comparison. Redistributing 30% of total tax revenue as a lump-sum transfer to households would ensure that a majority of income deciles in most regions increase their disposable income, with gains notably in the lower part of the income distribution.

English

Keywords: general equilibrium, redistribution, Climate policy, microsimulation
JEL: H23: Public Economics / Taxation, Subsidies, and Revenue / Taxation and Subsidies: Externalities; Redistributive Effects; Environmental Taxes and Subsidies; Q58: Agricultural and Natural Resource Economics; Environmental and Ecological Economics / Environmental Economics / Environmental Economics: Government Policy; H31: Public Economics / Fiscal Policies and Behavior of Economic Agents / Fiscal Policies and Behavior of Economic Agents: Household; Q52: Agricultural and Natural Resource Economics; Environmental and Ecological Economics / Environmental Economics / Pollution Control Adoption and Costs; Distributional Effects; Employment Effects; H32: Public Economics / Fiscal Policies and Behavior of Economic Agents / Fiscal Policies and Behavior of Economic Agents: Firm
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