Growth Impacts of Swiss Steering Based Climate Policies

Swiss Journal of Economics and Statistics, Forthcoming

24 Pages Posted: 10 Apr 2019

See all articles by Adriana Marcucci

Adriana Marcucci

ETH Zurich

Lin Zhang

City University of Hong Kong (CityUHK)

Date Written: February 7, 2019

Abstract

This paper studies the growth impacts of realizing two long-term carbon targets in Switzerland with alternative steering based climate policies. For this analysis we use the Computable Induced technical change and Energy (CITE) model, a computable general equilibrium (CGE) model with endogenous growth. We find that achieving the climate targets could lead to a decrease in utility and an increase in investments through the shift of labor from manufacturing to research. Higher investments coming from higher innovation could compensate the reduction in output due to the carbon policies, leading to relatively unaffected economic output. The economic structure adjusts in favor of energy-extensive sectors relative to energy-intensive sectors. Moreover, the results from the CITE model show that a tax that differentiates the sectors regulated by the emission trading system (ETS) and non-ETS sectors does not have a significant effect on the economic growth compared to an economy-wide tax scheme.

Keywords: endogenous growth; Swiss climate policy; CGE

JEL Classification: Q43, C68, Q48, O41

Suggested Citation

Marcucci, Adriana and Zhang, Lin, Growth Impacts of Swiss Steering Based Climate Policies (February 7, 2019). Swiss Journal of Economics and Statistics, Forthcoming. Available at SSRN: https://ssrn.com/abstract=3357439 or http://dx.doi.org/10.2139/ssrn.3357439

Adriana Marcucci

ETH Zurich ( email )

Rämistrasse 101
ZUE F7
Zürich, 8092
Switzerland

Lin Zhang (Contact Author)

City University of Hong Kong (CityUHK) ( email )

83 Tat Chee Avenue
Kowloon
Hong Kong

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