TY  - JOUR
AU  - Rotemberg,Julio J.
AU  - Woodford,Michael
TI  - Energy Taxes and Aggregate Economic Activity
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 4576
PY  - 1993
Y2  - December 1993
UR  - http://www.nber.org/papers/w4576
L1  - http://www.nber.org/papers/w4576.pdf
N1  - Author contact info:
Julio J. Rotemberg
Graduate School of Business
Harvard University, Morgan Hall
Soldiers Field
Boston, MA  02163
Tel: 617/495-1015
Fax: 617/496-5994
E-Mail: jrotemberg@hbs.edu

Michael Woodford
Department of Economics
Columbia University
420 W. 118th Street
New York, NY 10027
Tel: 212/854-1094
Fax: 212-854-8059
E-Mail: mw2230@columbia.edu
M1  - published as Julio I. Rotemberg, Michael Woodford. "Energy Taxes and Aggregate Economic Activity," in James M. Poterba, editor, "Tax Policy and the Economy, Volume 8" MIT Press (1994)

M2  - featured in NBER digest on 1994-07-01
AB  - This paper shows that the output losses from energy taxes are significantly larger than usually computed when due account is taken of imperfect competition among energy using firms.  Even with perfect competition among these firms, the loss in GNP is of the same order of magnitude as the revenue raised by these taxes.  However, in the presence of imperfect competition the output losses are much higher. There are particularly large transitory losses in the immediate aftermath of energy price increases when firms act as implicitly colluding oligopolists.  These losses become considerably smaller if energy taxes are phased-in.  We also show that taxes that affect only household consumption of energy have much smaller effects.  In particular, for the empirically plausible parameter values we consider, such taxes have no effect on employment or output in the non-energy sector.
ER  -