The economic impacts of UK fiscal policies and their spillover effects on the energy system
Ross, Andrew G. and Allan, Grant and Figus, Gioele and McGregor, Peter G. and Roy, Graeme and Swales, J. Kim and Turner, Karen; John, Madden R. and Shibusawa, Hiroyuki and Higano, Yoshiro, eds. (2020) The economic impacts of UK fiscal policies and their spillover effects on the energy system. In: Environmental Economics and Computable General Equilibrium Analysis. Springer, Singapore, pp. 171-192. ISBN 9789811539701
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Abstract
The energy system and the economy are inextricably intertwined. Whilst this interdependence is, of course, widely recognized, it has not featured prominently in assessing the likely impact of economic policies. In principle, fiscal policies are likely to have an influence on key elements of the energy system, the neglect of which may lead to inefficiencies in the design of appropriate energy and economic policies. The importance of this in practice depends on the strength of the spillover effects from fiscal policy instruments to energy policy goals. This is the focus of this chapter. We employ a multi-sectoral computable general equilibrium approach for the United Kingdom that allows us to track the impact of key fiscal policy interventions on goals of economic and energy policies. We explore whether it is possible to stimulate the economy through fiscal policy without generating an adverse impact on the energy system. Overall, our results suggest that it is unlikely that an increase in current public spending or a fall in the income tax rate will generate a simultaneous increase in GDP and fall in emissions in the United Kingdom context. Nonetheless, there are undoubted differential spillover effects on key components of the energy system from tax and public spending interventions that may prove capable of being exploited through the coordination of fiscal and energy policies. Even if it seems doubtful that fiscal policies would be formulated with a view to improved coordination with energy policies, policymakers can benefit from knowledge of the likely direction and scale of fiscal spillover effects to key elements of the energy system, since this reveals, for example, the extent of any energy policy adjustment that would be required to maintain a given level of emissions.
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Item type: Book Section ID code: 73971 Dates: DateEvent12 July 2020Published12 July 2020Published OnlineNotes: Part of the New Frontiers in Regional Science: Asian Perspectives book series (NFRSASIPER, Volume 41). Subjects: Social Sciences > Economic Theory Department: Strathclyde Business School > Economics
Strathclyde Business School > Fraser of Allander Institute
Strategic Research Themes > Energy
Faculty of Humanities and Social Sciences (HaSS) > Government and Public Policy > PoliticsDepositing user: Pure Administrator Date deposited: 24 Sep 2020 14:19 Last modified: 02 Aug 2024 00:40 URI: https://strathprints.strath.ac.uk/id/eprint/73971