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Title:Does the indexing of government transfers make carbon pricing progressive? PDF Logo
Authors:Fullerton, Don
Heutel, Garth
Metcalf, Gilbert
Issue Date:2011
Series/Report no.:CESifo working paper: Energy and Climate Economics 3315
Abstract:We analyze both the uses side and the sources side incidence of domestic climate policy using an analytical general equilibrium model, taking into account the degree of government program indexing. When transfer programs such as Social Security are explicitly indexed to inflation, higher energy prices automatically lead to cost-of-living adjustments for recipients. We show results with no indexing, 100 percent indexing, and partial indexing based on our analysis of actual transfer programs. When households are classified by annual income, the indexing of U.S. transfers is not enough to offset the regressive uses side, but when they are classified by annual expenditures as a proxy for permanent income, transfer indexing does offset regressivity across the lowest income groups.
JEL:H23
Q54
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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