Published in:Government of the Italian Republic (Italy), Ministry of Economy and Finance, Department of the Treasury Working Paper ; No. 3
Extent:
1 Online-Ressource (52 p)
Language:
English
Origination:
Footnote:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments May 9, 2016 erstellt
Description:
We build up a large scale, New Keynesian dynamic general equilibrium model embodying a cap on pollutant emissions, an electricity sector and fuel consumption to analyse climate-energy policies for the Italian economy. We consider several applications to illustrate how emission mitigation policies are likely to affect the economy. Our results show that a major trade-off may emerge between environmental quality and economic activity. However, we show how this potential trade-off can be effectively overcome by recycling the revenues from the sales of emission permits. Also, we find that the presence of an emission cap may significantly limit the expansionary effects of fiscal interventions as well as of policies aimed at fostering competition and productivity. Finally, a negative shock on gas and oil prices has a positive effect on the level of economic activity but is also found to increase investment in renewable sources