A new carbon tax proposal and a big new carbon tax research report
Representative Carlos Curbelo (R-FL) introduced a carbon tax bill to the House last week (though it is “sure to fail” with the current government, it's unusual to see a carbon tax proposed by a Republican). According to Reuters, “Curbelo said the tax would generate $700 billion in revenue over a decade for infrastructure investments.” A deep analysis is available from The Center on Global Energy Policy at Columbia SIPA, which started up a Carbon Tax Initiative this year.
For a broader look at carbon taxes, earlier this month the Columbia initiative published a significant four-part series on the “economic, energy, and environmental implications of federal carbon taxes” (press release here).
The overview covers impacts on energy sources:
“The effects of a carbon tax on prices are largest for energy produced by coal, followed by oil, then natural gas, due to the difference in carbon intensity of each fuel. Every additional dollar per ton of the carbon tax increases prices at the pump by slightly more than one cent per gallon for gasoline and slightly less than one cent per gallon for diesel.”
And examines a few possible revenue uses:
“How the carbon tax revenue is used is the major differentiating factor in distributional outcomes. A carbon tax policy can be progressive, regressive, or neither.”
- The economy/welfare report imagines a few possibilities as to how a carbon tax could reduce payroll taxes or provide rebates to households. To give a sense of the scale of lump-sum rebates to households: “For the benchmark case, these rebates are initially $1,751 per household and increase to 2,091 USD per household by 2029, to 2,945 USD per household by 2039, and to 5,985 USD per household by 2069.” Though this is a “quite progressive” option, the modeling finds negative macroeconomic effects because “labor supply and the capital stock decrease” (30, 29). Link.
- At Vox, David Roberts has a piece on carbon taxes in general, including quotes from Noah Kaufman, who runs the Carbon Tax Initiative at Columbia. One of the key points from the article is the insufficiency of conventional economic modeling. Roberts asks why carbon tax scenarios are usually modeled as revenue neutral: “Why not rebate (or reduce payroll taxes) enough to protect low- and middle-income Americans and then use the rest for clean energy infrastructure and transition assistance for vulnerable communities?” Kaufman responds: “‘Economic models in this space are typically not designed to do revenue positive scenarios,” he told me, ‘and in my experience, modelers are uncomfortable with the idea of projecting the economic impacts of additional government spending.’ He hopes, as do I, that modelers get a little more adventurous in this respect. Of all the reasons to make a carbon tax revenue-neutral, ‘difficulty modeling anything else’ is among the worst.” Link.
A newly published data set captures world trade back to 1800
Economists GIOVANNI FEDERICO and ANTONIO TENA-JUNGUITO have published The World Trade Historical Database, a compiled set of import and export data for trading polities beginning in the year 1800.
From a post at VoxEU introducing the project:
“Since 2007, the apparently unstoppable growth of world trade has come to a halt, and the openness of the world economy has been stagnating, or even declining. The recent prospect of a trade war is fostering pessimism for the future. Some people are hinting at a repetition of the Great Depression. These historical parallels are fascinating, although somewhat risky. At the very least, one should know exactly what happened to trade in the past. This is fairly easy for recent years, but the series available for the pre-1938 period are incomplete, obsolete, and sometimes just wrong."
Link to the post. The project involved compiling data from a wide range of historical sources and estimates from the secondary literature. Their methods paper provides an overview of existing series and the deficiencies their new work addresses.
- A 2017 paper by Federico and Tena-Junguito uses the data to compare globalization waves prior to 2007. "We describe trends in trade and openness, investigate the proximate causes of change in openness and estimate the gains from trade from the early nineteenth century onwards. Our results suggest that the conventional wisdom has to be revised." Link.
- The 18th World Economic History Congress took place in Boston July 29 - August 3rd, with the theme Waves of Globalization. "The political world looks very different today than it did just a few years ago, even if the fundamentals of the international economy have not changed much. This strikes me as exactly the moment when the work of economic historians is of greatest importance." Link to the conference page with program listings, and link to a Q&A with Professor Anne McCants.
- In Nature, an interview with Brent Hecht, who recently proposed an intervention in the peer-review process to foster ethical considerations of new computer science research: "the computer-science community should change its peer-review process to ensure that researchers disclose any possible negative societal consequences of their work in papers, or risk rejection." Link to the interview, link to the proposal.
- A great resource that assumes no prior knowledge: the 2018 edition of the Handbook on European Data Protection Law. “Explains key case law, summarising major rulings of both the Court of Justice of the European Union and the European Court of Human Rights. In addition, it presents hypothetical scenarios that serve as practical illustrations of the diverse issues encountered in this ever-evolving field.” Link.
- Doug Ford has cancelled Ontario's basic income pilot program. Link. And link to ESP's Taylor Jo Isenberg's Medium post on the news.
- The Data Transfer Project—a collaboration between Facebook, Google, Microsoft, and Twitter focussed on the development of an open-source data portability platform—has released its white paper. Link. And link to some coverage in the Verge.
- On the path-dependency of town locations, from Roman Britain and France to the present: "The divergent paths of these two urban networks makes it possible to study the spatial consequences of the ‘resetting’ of an urban network, as towns across Western Europe re-emerged and grew during the Middle Ages." Link.
- A post at VoxEU explores the history and revenue effects of computerized VAT enforcement in China. Link.
- Income-contingent university loans. "The objective of this system is to share the costs of education between beneficiaries and the government.... Risks are also shared. If the education provided is of poor quality, and the return is low, the cost is borne by the public sector. This suggests that the public sector will have a greater incentive to monitor the quality of education under the system, since it bears more of the cost of bad outcomes." Link.
- A report from the Aspen Institute: 16% of suicides in America are related to financial obligations. Link. ht Barry
- A New America economist gives a left-leaning interpretation of globalization. "The conventional wisdom is there have been two globalizations in the modern era. The first began around 1870 and ended in 1914. The second began in 1945 and is still underway. This paper challenges that view and argues there have been three globalizations, not two.... The Victorian first globalization and Keynesian era second globalization were driven by gains from trade, and those gains increased industrialized country real wages. The neoliberal third globalization has been driven by industrial reorganization motivated by distributional conflict. Trade theory does not explain the third globalization; capital’s share has increased at the expense of labor’s; and there can be no presumption of mutually beneficial country gains from the third globalization." Link.
- From Brookings, a paper on the effects of closing local newspapers: "Three years after a newspaper closure, municipal bond yields in that county increase by 0.05 to 0.11 percentage points… newspaper closures are associated with deterioration in many government efficiency metrics, including government wage rates, government employees per capita, and tax dollars per capita." Link to an explanatory blog post, link to the paper.
- History of economics: “Hayek, Hicks, Radner, and Three Equilibrium Concepts.” Link.
- On his blog, Kevin Bryan explains how this year’s Fields medal relates to economics. “The history of economics has been a long series of taking tools from the frontier of mathematics… We are now making progress on pricing issues that have stumped some of the great theoretical minds in the history of the field.” Link.