TY - JOUR AU - Fullerton, Don AU - Heutel, Garth AU - Metcalf, Gilbert E TI - Does the Indexing of Government Transfers Make Carbon Pricing Progressive? JF - National Bureau of Economic Research Working Paper Series VL - No. 16768 PY - 2011 Y2 - February 2011 DO - 10.3386/w16768 UR - http://www.nber.org/papers/w16768 L1 - http://www.nber.org/papers/w16768.pdf N1 - Author contact info: Don Fullerton Department of Finance University of Illinois 515 East Gregory Drive, BIF Box#30 (MC520) Champaign, IL 61820 Tel: 217/244-3621 Fax: 217/244-3102 E-Mail: dfullert@illinois.edu Garth Heutel 436 Andrew Young School Department of Economics Georgia State University PO Box 3992 Atlanta, GA 30302-3992 Tel: 404 413 0159 E-Mail: gheutel@gsu.edu Gilbert E. Metcalf Department of Economics Tufts University Medford, MA 02155 Tel: 617/627-3685 Fax: 617/627-3917 E-Mail: gilbert.metcalf@tufts.edu AB - We analyze both the uses side and the sources side incidence of domestic climate policy using an analytical general equilibrium model, taking into account the degree of government program indexing. When transfer programs such as Social Security are explicitly indexed to inflation, higher energy prices automatically lead to cost-of-living adjustments for recipients. We show results with no indexing, 100 percent indexing, and partial indexing based on our analysis of actual transfer programs. When households are classified by annual income, the indexing of U.S. transfers is not enough to offset the regressive uses side, but when they are classified by annual expenditures as a proxy for permanent income, transfer indexing does offset regressivity across the lowest income groups. ER -