Chi L. Ta
Department of Agricultural and Consumer Economics
University of Illinois
Urbana, IL 61801
Institutional Affiliation: University of Illinois at Urbana-Champaign
NBER Working Papers and Publications
|March 2019||Costs of Energy Efficiency Mandates Can Reverse the Sign of Rebound|
with Don Fullerton: w25696
Improvements in energy efficiency reduce the cost of consuming services from household cars and appliances and can result in a positive rebound effect that offsets part of the direct energy savings. We use a general equilibrium model to derive analytical expressions that allow us to compare rebound effects from a costless technology shock to those from a costly energy efficiency mandate. We decompose each total effect on the use of energy into components that include a direct efficiency effect, direct rebound effect, and indirect rebound effect. We investigate which factors determine the sign and magnitude of each. We show that rebound from a costless technology shock is generally positive, as in prior literature, but we also show how a pre-existing energy efficiency standard can negate th...
|February 2019||Environmental Policy on the Back of an Envelope: A Cobb-Douglas Model is Not Just a Teaching Tool|
with Don Fullerton: w25582
To clarify and interpret the workings of a large computable general equilibrium (CGE) model of environmental policy in the U.S., we build an aggregated Cobb-Douglas (CD) model that can be solved easily and analytically. Its closed-form expressions show exactly how key parameters determine the sign and size of effects from a large new carbon tax on emissions, revenue, prices, output, and welfare. Data and parameters from the detailed, dynamic CGE model of Goulder and Hafstead (2018) are used in the CD model to calculate results that can be compared with theirs. Results from the CD model track those from the large CGE model quite closely, even though the CD model omits much detail such as the number of sectors, intermediate inputs, and international trade. A CGE model is quite useful to gene...
Published: Don Fullerton & Chi L. Ta, 2019. "Environmental Policy on the Back of an Envelope: A Cobb-Douglas Model is Not Just a Teaching Tool," Energy Economics, .
|January 2017||Public Finance in a Nutshell: A Cobb Douglas Teaching Tool for General Equilibrium Tax Incidence and Excess Burden|
with Don Fullerton: w23064
To help first- or second-year graduate students in economics apply their theoretical training, this paper shows how to solve a simple and intuitive computable general equilibrium (CGE) model using a calculator. Because this simplified Harberger model uses Cobb Douglas functional forms for utility and production, one can solve for all input and output prices and quantities with no taxes and then solve for exact measures of output with a large tax change (not using derivatives). We then show how to solve simultaneously for capital and labor prices (incidence on the sources side of income), for both output prices (incidence on the uses side), for exact measures of overall welfare loss such as the equivalent variation, for excess burden and marginal excess burden, and for the effects on revenu...
Published: Don Fullerton & Chi L. Ta, 2017. "Public Finance in a Nutshell: A Cobb Douglas Teaching Tool for General Equilibrium Tax Incidence and Excess Burden," National Tax Journal, vol 70(1), pages 155-170. citation courtesy of