The Distributional Effects of Value Added Tax in Ireland

In this paper we examine the distributional effects of Value Added Tax (VAT) in Ireland. Using the 2004/2005 Household Budget Survey, we assess the amount of VAT that households pay as a proportion of weekly disposable income. We measure VAT payments by equivalised income decile, households of different composition and different household sizes. The current system is highly regressive. With the use of a micro-simulation model we also estimate the impact of changing the VAT rate on certain groups of items and the associated change in revenue. We also consider how the imposition of a flat rate across all goods and services would affect households in different categories. The Irish Government has recently announced that it proposes to increase the standard rate of VAT to 22 per cent in 2013 and to 23 per cent in 2014. We examine the distributional implications of such increases. The general pattern of results shows that those hardest hit are households in the first income decile, households in rural areas, 6 person households and households containing a single adult with children.

Proceedings of the Conference on Human and Economic Resources

The validity of the Hotelling’s rule, the fundamental theorem of nonrenewable resource economics, is limited by its partial equilibrium nature. One symptom of this limitation may be the disagreement between the empirical evidence, showing stable or declining resource prices, and the rule, predicting exponentially increasing prices. In this paper, we study the optimal depletion of a nonrenewable resource in a dynamic general equilibrium framework. We show that, in the long run, the price of a nonrenewable (i) is constant when the nonrenewable is essential in production, and (ii) increases only if the rate of return of capital is larger than the capital depreciation rate and the non-renewable is an inessential input in production. We believe that our model offers a theoretical explanation to non-growing nonrenewable prices and hence at least partially solves the paradox between the Hotelling’s rule and the empirical regularity. We also show that two factors play a crucial role in determining the long run behavior of nonrenewable prices, namely the elasticity of substitution between input factors, and the long run behavior of the real interest rate. Another major achievement of this study is the full analytical solution of the model under a Cobb-Douglas technology.

Population and trends in the global mean temperature

The Fisher Ideal index, developed to measure price inflation, is applied to define a population-weighted temperature trend. This method has the advantages that the trend is representative for the population distribution throughout the sample but without conflating the trend in the population distribution and the trend in the temperature. I show that the trend in the global area-weighted average surface air temperature is different in key details from the population-weighted trend. I extend the index to include urbanization and the urban heat island effect. This substantially changes the trend again. I further extend the index to include international migration, but this has a minor impact on the trend

The Social Cost of Carbon

The social cost of carbon is the damage avoided by slightly reducing carbon dioxide emissions. It is a measure of the desired intensity of climate policy. The social cost of carbon is highly uncertain because of the long and complex cause-effect chain, and because it quantifies and aggregates impacts over a long period of time, affecting all people in a wide range of possible futures. Recent estimates are around $\$$80/tCO$_2$