Generalized Compensation Principle

Tsyvinski, Aleh; Werquin, Nicolas

doi:10.3386/w23509

Cited by 17 publications

(10 citation statements)

References 18 publications

(30 reference statements)

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“…61 When the proceeds of the tax are used to reduce marginal labor tax rates in 58 The analysis assumes wages fully respond to energy price increases over the next 10 years so that it doesn't lead to higher unemployment. The specific parameters of the reform will depend on household's real income changes, the elasticities of labor supply and demand and features of the income distribution (Tsyvinski and Werquin 2019). 59 Holmlund and Soderstrom (2011).…”

Section: A Promoting Equitable Pricing Reformmentioning

confidence: 99%

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Fiscal Policies for Achieving Finland’s Emission Neutrality Target

Wingender¹,

Parry²

2021

IMF Working Papers

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Finland has pledged to cut net greenhouse gas emissions to zero by 2035 and has sectoral targets for deploying electric vehicles, phasing out coal generation, and oil-based space heating. Fiscal policies at the national and sectoral level could play a critical role in achieving these objectives. Carbon dioxide emissions are already priced significantly in Finland but prices vary substantially across fuels and sectors. The paper discusses a reform to both scale up, and progressively harmonize, pricing while using revenues to address equity issues. It also discusses the potential use of revenue-neutral feebate schemes to strengthen mitigation incentives for the transportation, industry, building, forestry, and agricultural sectors.

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Section: A Promoting Equitable Pricing Reformmentioning

confidence: 99%

“…(9). The compensating tax reform is calculated using Proposition 2 in Tsyvinski and Werquin (2019) by replacing the exogenous wage change with (̇−…”

mentioning

confidence: 99%

Fiscal Policies for Achieving Finland’s Emission Neutrality Target

Wingender¹,

Parry²

2021

IMF Working Papers

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“…Given the emission reduction of 20 percent, the size of the efficiency loss is equal to 16 percent of the revenue raised. 52 The specific parameters of the reform will depend on household's real income changes, the elasticities of labor supply and demand and features of the income distribution (Tsyvinski and Werquin 2019). Small reductions in marginal tax rates can compensate households for higher prices and lower wages due to the carbon tax.…”

Section: B Promoting Equitable Pricing Reformmentioning

confidence: 99%

Climate Mitigation Policy in Denmark: A Prototype for Other Countries

2020

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“…shortterm budget and borrowing constraints), as well as the economies' initial conditions and assumptions governing the partial and general equilibrium effects of the intervention (e.g. Kaplow, 2004;2012;Hendren, 2014;Tsyvinski and Werquin, 2018). Increasingly, compensating transfers that account for these considerations are seen as a way to mitigate the negative effects of economic disruptions in areas such as immigration (Card, 2009), trade liberalization (Antras, de Gortari and Itskhoki, 2016), and technical change, e.g.…”

Section: Introductionmentioning

confidence: 99%

Compensation strategies to enact new governance frameworks for SDG transformations

Horan

2019

pse

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There is an emerging consensus at international level that systemic transformations are needed to achieve the Sustainable Development Goals (SDGs). Such transformations require paradigm shifts in policies, with appropriate governance frameworks to implement them. Fundamental transformations are likely to generate winners and losers; the latter may act strategically to deter transformation. Most governance literature points at mutual gains negotiation methods to prevent the emergence of losers and create 'win-win' package deals. In this article a different -and less researched -approach will be discussed: (economic) compensation strategies. Drawing on the political economy literature of reform in transition economies, I propose three compensation strategies to buy out or weaken the opposition of strategic losers -big bang, optimal sequencing and divide-and-rule governance reforms -that can help to frame discussions around the political feasibility of new governance frameworks for SDG transformations. The paper suggests that careful consideration needs to be given to the design of these compensation packages, since history tells us that buying acceptance for reform can involve not just variation in economic outcomes, it can also have long-term political implications and distributional effects.

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Generalized Compensation Principle

Cited by 17 publications

References 18 publications

Fiscal Policies for Achieving Finland’s Emission Neutrality Target

Fiscal Policies for Achieving Finland’s Emission Neutrality Target

Climate Mitigation Policy in Denmark: A Prototype for Other Countries

Compensation strategies to enact new governance frameworks for SDG transformations

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