Cited by 262Energy, Environment, and Transportation PoliciesClimate Change Policy and EconomicsEnergy, Environment, Economic Growth

Estimating the effect of a gasoline tax on carbon emissions

Open access
Davis, Lucas W., Kilian, Lutz·2011·Journal of Applied Econometrics

Abstract

Recently the proposal has been made to raise gasoline taxes in the United States to curb carbon emissions. The existing literature on the sensitivity of gasoline consumption to changes in price may not be appropriate for evaluating the effectiveness of such a tax. First, most of these studies fail to address the endogeneity of gasoline prices. Second, the responsiveness of gasoline consumption to a change in tax may differ from the responsiveness of consumption to an average change in price. We address these challenges using a variety of methods including traditional single‐equation regression models, estimated by least squares or instrumental variables methods, and structural vector autoregressions. Our preferred approach exploits the historical variation in US federal and state gasoline taxes. Our most credible estimates imply that a 10‐cent per gallon increase in the gasoline tax would reduce carbon emissions from vehicles in the United States by about 1.5%. Copyright © 2010 John Wiley & Sons, Ltd.

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  • There is a consensus in the literature that the short-run price elasticity of oil supply is close to zero, if not effectively zero.

    “There is a consensus in the literature that this shortrun price elasticity of oil supply is close to zero, if not effectively zero.”

    From THE ROLE OF INVENTORIES AND SPECULATIVE TRADING IN THE GLOBAL MARKET FOR CRUDE OIL (2014) · cites this paper as [14]

    Section 4.1 (Price Specification; page unavailable) discusses a flat short-run gasoline supply curve as a modeling assumption. The passages found when searching for short-run oil supply elasticity and a literature consensus do not address either claim about oil supply. (LLM, conf=0.77)

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Research works printed but not linked: 2

  1. Abraham KG, Haltiwanger JC. 1995. Real wages and the business cycle. Journal of Economic Literature 33: 1215-1264.
  2. Nordhaus W. 2007. A review of the Stern review on the economics of global warming. Journal of Economic Literature 45: 686-702.

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Authors
Davis, L. W., & Kilian, L.
Affiliations
  • National Bureau of Economic Research (US)
  • University of Michigan (US)
Corresponding author
Davis, Lucas W.
Venue
Journal of Applied Econometrics
Publisher
Wiley
Published
2011-10-24
Volume
26
Issue
7
Pages
1187-1214
ISSN
  • 0883-7252 (ISSN-L)
  • 1099-1255
OpenAlex
W3023995262
Cited by
262
References
26
Citations by year
2026: 12 · 2025: 17 · 2024: 23 · 2023: 22 · 2022: 15 · 2021: 22 · 2020: 14 · 2019: 12 · 2018: 15 · 2017: 16 · 2016: 18 · 2015: 18 · 2014: 16 · 2013: 13 · 2012: 15
FWCI
6.00
Type
journal article
Language
en
Open access
Locations
  • Journal of Applied Econometrics (publishedVersion)
  • Deep Blue (University of Michigan) (submittedVersion)
  • RePEc: Research Papers in Economics (submittedVersion)
Topics
  • Physical Sciences › Energy › Renewable Energy, Sustainability and the Environment › Energy, Environment, and Transportation Policies
  • Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Climate Change Policy and Economics
  • Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Energy, Environment, Economic Growth
Keywords
gasoline tax, CO2 emissions, vehicle emissions, gasoline consumption, structural vector autoregression, instrumental variables, climate policy

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