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The Fiscal and Intergenerational Burdens of Brakes and Subsidies for Energy Prices

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Abstract

We study the effects of different financing rules for untargeted energy price brakes and subsidies on intergenerationalwelfare in a large-scale overlapping generations model. The results indicate that, in comparison to 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.

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  • Christian Scharrer & Johannes Huber, 2023. "The Fiscal and Intergenerational Burdens of Brakes and Subsidies for Energy Prices," Discussion Paper Series 346, Universitaet Augsburg, Institute for Economics.
    • Handle: RePEc:aug:augsbe:0346
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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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