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Microsimulating the Effects of Household Energy Price Changes in Spain

39 Pages Posted: 2 Feb 2005  

Miguel Rodríguez Méndez

University of Vigo - Dept. Applied Economics

Xavier Labandeira

University of Vigo - Faculty of Economics and Business

J. Maria Labeaga Azcona

Universidad Nacional de Educacion a Distancia (UNED) - Faculty of Economics

Date Written: December 2004

Abstract

In this paper we present a microsimulation model to calculate the effects of hypothetical ex-ante price changes in the Spanish energy domain. The model rests on our prior estimation of a demand system which is especially designed for simultaneous analysis of different energy goods and uses household data from 1973 to 1995. Our objective is to obtain indepth information on the behavioural responses by different types of households, which will allow us to determine the welfare effects of such price changes, their distribution across society and the environmental consequences within the residential sector. Although the model used is able to reproduce any type of price change, we illustrate the paper with an actual simulation of the effects of energy taxes that resemble a 50 Euro tax on CO2 (carbon dioxide) emissions. The results show a significant response by households, sizeable emission reductions, tax revenues, welfare changes and distributional effects. The simulated policy can thus be considered a feasible option to tackle some of the current and severe inefficiencies in Spanish energy and environmental domains.

Keywords: Energy, Taxation, Demand, Spain

JEL Classification: C33, H23, H31

Suggested Citation

Rodríguez Méndez, Miguel and Labandeira, Xavier and Labeaga Azcona, J. Maria, Microsimulating the Effects of Household Energy Price Changes in Spain (December 2004). FEEM Working Paper No. 161.04. Available at SSRN: https://ssrn.com/abstract=644724 or http://dx.doi.org/10.2139/ssrn.644724

Miguel Rodríguez Méndez (Contact Author)

University of Vigo - Dept. Applied Economics ( email )

Facultade Empresariais e Turismo
Ourense, Ourense E-32004
Spain
+34 9 88368760 (Phone)
+34 9 8681 2401 (Fax)

HOME PAGE: http://webs.uvigo.es/miguel.r/

Xavier Labandeira

University of Vigo - Faculty of Economics and Business ( email )

As Lagoas Marcosende s/n
Vigo, Galiza E36310
Spain

José Maria Labeaga Azcona

Universidad Nacional de Educacion a Distancia (UNED) - Faculty of Economics ( email )

Calle Senda del Rey, 11
28040 Madrid
Spain
+34 91 398 7811 (Phone)
+34 91 398 6339 (Fax)

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