Seminar in Macroeconomics: Climate Policy - Who Gains and Who Loses?

Description

In this seminar, we will employ macroeconomic models to evaluate and compare some of the most common political approaches to mitigate and adapt to climate change. In particular, we focus on the effects of carbon taxation and the use of the resulting tax revenue. For instance, it is well known that if the revenue is redistributed equally among all households ("Klimageld''), the policy will be progressive: poorer households consume less (carbon-intensive goods) and pay less carbon taxes, and thus, in relative terms, receive a larger amount. If, on the other hand, revenues are used to cut consumption taxes or subsidize green technology adoption, rich households benefit more. Furthermore, large differences may arise between households in rural and urban areas when they differ by consumption habits, access to public transportation and housing size. Apart from carbon taxation, we will also discuss subsidies for investment in green technologies and adaptation measures.

Upon successful completion, seminar participants will gain an understanding of how climate policy needs to be designed such that it is not only effective, but also finds broad support in society.

Task

Your tasks consist of 

• presenting the provided academic material on one of the topics in a 30-minute presentation,
• actively contributing to the 15-minute discussion following each presentation, and 
• writing a seminar paper, of about 8 pages, connecting to further articles in the scientific literature while displaying your critical thinking. 

The language of this seminar is English, which applies to presentations, discussions, and seminar papers.

Dates

• Kick-off meeting: Monday, April 28, from 15:45 to 17:15.
• Final presentation: Monday, July 7, and Monday, July 14.
• Submission of seminar thesis: Sunday, August 24, 23pm.

This seminar will take place in person. Room details will be provided in due course.

Prerequisites

Recommended: Basic statistics, Intro to Microeconomics and Intro to Macroeconomics.

Literature

All the papers presented below employ quantitative stochastic macroeconomic models featuring heterogeneous agents that differ in wealth and, potentially, geographical location and/or exposure to climate damages. We will provide an introduction to heterogeneous agent models in the first session.

Topic 1: Effects of Carbon Taxation: Rich vs. Poor

1. S. Fried, K. Novan, and W. B. Peterman. The distributional effects of a carbon tax on current and future generations. Review of Economic Dynamics, 30:30–46, 2018.
2. F. Crucitti, M. Mersch, A. Michaelides, and A. Ostrovnaya. Green technology adoption over the life cycle. Technical report, Available at SSRN 5019631, 2024.
3. M. Kuhn and L. Schlattmann. Distributional consequences of climate policies. Revise and Resubmit American Economic Journal: Macroeconomics, 2024.

Topic 2: Distributional Effects of Carbon Taxation: Urban vs. Rural

1. C. Labrousse and Y. Perdereau. Geography versus income: the heterogeneous effects of carbon taxation. Technical report, 2024.
2. L. Schlattmann. Spatial redistribution of carbon taxes. Technical report, ECONtribute Discussion Paper, 2024

Topic 3: Climate Change and Investment: Green Technology and Adaptation

1. S. Fried. Seawalls and stilts: A quantitative macro study of climate adaptation. The Review of Economic Studies, 89(6):3303–3344, 2022.
2. S. Fried, K. Novan, and W. B. Peterman. Climate policy transition risk and the macroeconomy. European Economic Review, 147:104174, 2022.
3. A. Lanteri and A. A. Rampini. Financing the adoption of clean technology. Technical report, 2023.