Public economics

Organic chemistry

Mathematics

Greenhouse gas

Price elasticity of demand

Carbon dioxide

State income tax

Biology

Algorithm

Gasoline

Composite number

Elasticity (physics)

Carbon fibers

Econometrics

Composite material

Economics

Tax deferral

Gross income

Microeconomics

Natural resource economics

Chemistry

Ecology

Materials science

Carbon tax

Monetary economics

Tax reform

American Economic Journal Economic Policy

This quasi-experimental study is the first to find a significant causal effect of carbon taxes on emissions, empirically analyzing the implementation of a carbon tax and a value-added tax on transport fuel in Sweden. After implementation, carbon dioxide emissions from transport declined almost 11 percent, with the largest share due to the carbon tax alone, relative to a synthetic control unit constructed from a comparable group of OECD countries. Furthermore, the carbon tax elasticity of demand for gasoline is three times larger than the price elasticity. Policy evaluations of carbon taxes, using price elasticities to simulate emission reductions, may thus significantly underestimate their true effect. (JEL H23, L91, Q54, Q58)

Carbon Taxes and CO2 Emissions: Sweden as a Case Study