CLIMATE CHANGE AND INEQUALITY
Rich households generate a disproportionate share of carbon emissions, particularly when the emissions from their investments are accounted for as well as their emissions from consumption. This paper builds a quantitative general-equilibrium model that accounts for inequality in both wealth and emissions and uses it to study the aggregate and distributional effects of carbon taxes. In addition to a uniform tax on all emissions, I consider three targeted policies: (i) a tax on emissions from “basic” energy consumption borne disproportionately by households of low socioeconomic status; (ii) a tax on emissions from consumption borne only by the rich; and a (iii) tax on production emissions borne by shareholders. In a setting where carbon footprints arise from both consumption and production emissions, taxing consumption emissions induces different economic outcomes than taxing production emissions. The production-emissions tax reduces emissions inequality and is welfare improving, despite wages and output falling, but increases wealth inequality by reallocating capital towards highly productive firms. In contrast, the basic consumption tax is the only tool to increase output, but increases inequality along both dimensions. Welfare rises, especially for low productivity groups, due to wages not falling as they do under production-emissions taxes. The luxury-consumption tax reduces emissions inequality slightly but has a negligible effects on aggregate outcomes. These differential economic responses move us away from a world of uniform taxation. The optimal mix of targeted policies with differing taxes on production emissions and consumption emissions yields better economic outcomes than a uniform carbon tax achieving the same reduction in aggregate emissions.
RENEWABLE ENERGY
Global adoption of renewable energy has increased rapidly since the early 2000s, driven partly by learning-by-doing mechanisms. Despite this progress, the world remains below what is needed to reach net-zero by 2030. This paper examines how the Russia-Ukraine war accelerated Europe's clean energy transition. The European Union relied heavily on Russian natural gas for electricity generation, and the war disrupted this relationship, creating a supply shock. Countries experienced this shock at varying intensities depending on their pre-war import exposure to Russian gas. We exploit variation in pre-war Russian gas dependency and find that more dependent countries transitioned faster post-war compared to less-exposed counterparts. We develop a model featuring learning-by-doing and heterogeneous fossil-fuel dependency to rationalize these findings. Preliminary results show economies accelerate their renewable transition approximately four periods after a permanent supply shock, while highly exposed countries do so up to eight periods earlier due to higher electricity prices, lower fossil-fuel investment returns, and learning-by-doing amplification. Low-exposure countries show minimal response. Crucially, this acceleration only sustains when the shock is permanent, suggesting that learning-by-doing alone cannot generate lasting effects from temporary disruptions.
RENEWABLE ENERGY
The transition to clean energy is an imperative element of sustainable growth. How are the incentives to invest in the transition to clean energy affected by the level of development of an economy? To answer this question, we link clean energy transitions to the process of structural change - the secular reallocation of labor across sectors in an economy. In this paper, we provide evidence of differential emission levels and clean energy transition rates between economies at different stages of development. We highlight how the process of structural change can impact the proportion of clean vs. dirty energy in an economy using a model of structural change augmented with an energy sector. We model an infinitely-lived closed economy with two final sectors: manufacturing and services, and one intermediate sector: energy. There is one representative and competitive firm in each sector which produces using labor and energy inputs. Energy can be dirty or clean, and the government invests in energy efficiency and in building renewable energy capacity. We show that economies at different stages of development invest different amounts for transitioning to clean energy since the benefits from the transition are higher when a higher proportion of GDP comes from energy-intensive sectors.
CLIMATE CHANGE AND INEQUALITY
This paper studies how income dispersion and the income elasticity of household emissions shape the desirability of progressive versus regressive income taxation when carbon damages are present and direct carbon pricing is not possible. I embed a climate block that links emissions to income through a reduced-form environmental Engel curve into a partial-insurance framework with endogenous skill investment, elastic labour supply, and a publicly provided good. The government chooses the degree of progressivity or regressivity of the labour income tax system. Using closed-form expressions for social welfare, I show that when emissions rise faster than income, progressivity reduces both inequality and aggregate emissions and is unambiguously welfare-improving. When emissions rise more slowly than income, the climate channel weakens. Progressivity still redistributes income but delivers limited emission gains as it compresses the incomes of high earners who emit less per dollar of income. These results demonstrate how income-tax progressivity can act as a climate policy instrument in the absence of direct carbon pricing.
WEALTH INEQUALITY
Over the last 40 years, the U.S estate taxation structure underwent changes that reduced its progressivity, allowing larger estates to pass on their wealth tax-free. Over the same time period, wealth inequality has risen. This paper will use a quantitative model to gauge the effect this reduced progressivity had on wealth concentration. The model matches the distribution of bequests given and dollars transferred in the data, although it cannot generate extreme wealth concentration. I find that rolling estate taxes back to their 1972 values lowers the share of wealth accruing to the top 0.5%, 1%, 5%, and 10% of wealth. The share of wealth accruing to the top 0.1% slightly rises.