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The fiscal and intergenerational burdens of brakes and subsidies for energy prices

Author

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  • Johannes Huber

    (University of Regensburg)

  • Christian Scharrer

    (University of Augsburg)

Abstract

We study the effects of different financing rules for untargeted energy price brakes and subsidies on intergenerational welfare in a large-scale overlapping generations model. The results indicate that, in comparison with a laissez-faire solution without any government interventions, debt-financed implementations of such measures are very detrimental for young and future generations. However, the taxation of windfall profits can significantly contribute to reduce the economic burdens of these generations; whereas, the positive effects on older generations are much less pronounced.

Suggested Citation

  • Johannes Huber & Christian Scharrer, 2024. "The fiscal and intergenerational burdens of brakes and subsidies for energy prices," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 31(5), pages 1249-1273, October.
    • Handle: RePEc:kap:itaxpf:v:31:y:2024:i:5:d:10.1007_s10797-023-09807-8
    DOI: 10.1007/s10797-023-09807-8
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    More about this item

    Keywords

    Fiscal policy; Price brakes; Price subsidies; Energy crisis; Welfare;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General

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