Environmental policy and endogenous market structure

The Macroeconomic Effects of a Carbon Tax to Meet the U.S. Paris Agreement Target: The Role of Firm Creation and Technology Adoption

“…3 Critically, none of these papers consider the link between carbon taxes and labor market outcomes, which lie at the center of our analysis. Closest to our work are Acemoglu et al (2016), who propose a framework where firms choose to produce using either a dirty or clean technology and invest in research and development, Hafstead and Williams III (2018), who use a two-sector ("dirty" and "clean") framework with equilibrium unemployment and find that carbon-tax-induced reductions in emissions entail both output and unemployment costs, and Annicchiarico, Correani, and Di Dio (2018), who use a one-sector model with endogenous firm entry and frictionless labor markets and find that greater carbon taxes lead to lower output, partly via lower firm creation. Our findings show that the adverse effects from carbon taxes in both Hafstead and Williams III (2018) and Annicchiarico, Correani, and Di Dio (2018) depend critically on whether firms can adopt green technologies.…”

“…Several papers in this literature focus on the link between pollution emissions and business cycles from a positive standpoint, but abstract from considering labor market outcomes and the potential differences between the short-and long-term aggregate effects of carbon taxes (that is, the transition path to an environment with higher carbon taxes). 2 Only recently has the literature started to explore the relationship between environmental policy, macroeconomic outcomes, and labor markets, including unemployment (Hafstead and Williams III, 2018; Aubert and Chiroleu-Assouline, 2019; Férnandez Intriago, 2020; Gibson and Heutel, 2020;and Castellanos and Heutel, 2021).…”

The Macroeconomic Effects of a Carbon Tax to Meet the U.S. Paris Agreement Target: The Role of Firm Creation and Technology Adoption

“…3 Critically, none of these papers consider the link between carbon taxes and labor market outcomes, which lie at the center of our analysis. Closest to our work are Acemoglu et al (2016), who propose a framework where firms choose to produce using either a dirty or clean technology and invest in research and development, Hafstead and Williams III (2018), who use a two-sector ("dirty" and "clean") framework with equilibrium unemployment and find that carbon-tax-induced reductions in emissions entail both output and unemployment costs, and Annicchiarico, Correani, and Di Dio (2018), who use a one-sector model with endogenous firm entry and frictionless labor markets and find that greater carbon taxes lead to lower output, partly via lower firm creation. Our findings show that the adverse effects from carbon taxes in both Hafstead and Williams III (2018) and Annicchiarico, Correani, and Di Dio (2018) depend critically on whether firms can adopt green technologies.…”

Climate Policies Under Dynamic International Economic Cycles: A Heterogeneous Countries DSGE Model

“…Another category, appearing later, is the improving and modifying RBC framework, in which the nominal rigidities are added to the E-DSGE models through a new Keynesian framework. See Annicchiarico and Di Dio (2015), Xu et al, (2016), Annicchiarico et al, (2018), and Xiao et al, (2018).…”