We analyse the distributional effects of increased oil excises in Belgium by combining a Computable General Equilibrium (CGE) model with the EUROMOD microsimulation framework that exploits the rich detail of household-level data. The link between the CGE model and the micro level is top-down, feeding changes in commodity prices, factor returns and employment by sector into a non-behavioural microsimulation. The results suggest that policymakers face an equity-efficiency trade-off driven by the choice of revenue recycling options. Distributional effects of the environmental tax reform appear to depend strongly on changes in factor prices and welfare payments.
Energy policy income distribution CGE microsimulation