Lucas Bretschger, 11 October 2015

There is reasonable hope that the upcoming United Nations Conference on Climate Change in Paris (COP21) will reach a consistent global climate agreement. What makes the negotiations particularly difficult is not economic efficiency, but the equity implications of climate policy. This column presents a framework for incorporating equity concerns into policy design. Building from four equity principles, it reduces the complex problem of international burden sharing to a simple rule tied to a single metric.

Laura Grigolon, Mathias Reynaert, Frank Verboven, 10 January 2015

Using a rich dataset for the European car markets, this column shows that consumers moderately undervalue future fuel costs. This investment inefficiency is too small to justify upfront car taxes to promote fuel efficient cars. A car tax results in a more fuel efficient vehicle fleet than a fuel tax, but fails to induce high-mileage consumers to substitute to more fuel efficient cars. Once we take this targeting effect into account, fuel taxes turn out to be more effective.

Radek Stefanski, 30 May 2014

No comprehensive database of directly measured fossil-fuel subsidies exists at the international or the sub-national level, yet subsidies may be crucial drivers of global carbon emissions. This column describes a novel method for inferring carbon subsidies by examining country-specific patterns in carbon emission-to-output ratios, known as emission intensities. Calculations for 170 nations from 1980-2010 reveal that fossil-fuel price distortions are enormous, increasing, and often hidden. These subsidies contributed importantly to increasing emissions and lower growth.

Ronald Steenblik, Jehan Sauvage, Jagoda Egeland, 15 September 2012

Reforming fossil fuel subsidies might seem to be an easy option – reduced fiscal outlays would help with debt problems while also helping to reduce greenhouse gas emissions. This column argues that, despite growing interest in reforming them, there still exists much confusion over the concept and magnitude of fossil fuel subsidies – and this needs to change first.

John Hassler, 11 March 2012

The concern over the negative consequences of global warming has led to a vast array of policy measures aimed at reducing the use of fossil fuels. Yet a comprehensive plan for a shift towards more climate-friendly energy is still lacking. This column argues that a major reason for this is that macroeconomists have not been sufficiently active in the policy discussion. It then lays out four lessons from macroeconomics that should be helpful.

Tony Wrigley, 22 July 2011

Before the industrial revolution, economists considered output to be fundamentally constrained by the limited supply of land. This column explores how the industrial revolution managed to break free from these shackles. It describes the important innovations that made the industrial revolution an energy revolution.

Hans-Werner Sinn, 24 October 2008

According to Hans-Werner Sinn of CESifo, public policy discussion of climate change has focused only on the reduction of demand for fossil fuel, neglecting the supply side. In an interview with Romesh Vaitilingam, recorded at the annual congress of the European Economic Association in Milan in August 2008, he explains his view.

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