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The impact of fuel duty on the macro-economy

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  • Iana Liadze
  • Dawn Holland

Abstract

In this short study, we assess the macro-economic impact of government plans to increase the rate of fuel duty from 1st January 2013. The assessment is carried using the National Institute’s Global Econometric Model, NiGEM. We use the methodology developed by Bagaria, Holland and Van Reenen (2012) to allow for the current depressed state of the UK economy, which will amplify and prolong the effects of any fiscal tightening measures introduced in the near term. We also consider some alternative policy options in relation to fuel duty.

Suggested Citation

  • Iana Liadze & Dawn Holland, 2012. "The impact of fuel duty on the macro-economy," National Institute of Economic and Social Research (NIESR) Discussion Papers 398, National Institute of Economic and Social Research.
    • Handle: RePEc:nsr:niesrd:398
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    References listed on IDEAS

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    1. Alan J. Auerbach & Yuriy Gorodnichenko, 2012. "Fiscal Multipliers in Recession and Expansion," NBER Chapters, in: Fiscal Policy after the Financial Crisis, pages 63-98, National Bureau of Economic Research, Inc.
    2. Ray Barrell & Karen Dury, 2003. "Asymmetric Labour Markets in a Converging Europe: Do Differences Matter?," National Institute Economic Review, National Institute of Economic and Social Research, vol. 183(1), pages 56-65, January.
    3. Ray Barrell & Martin Weale, 2009. "The Economics of a Reduction in VAT," Fiscal Studies, Institute for Fiscal Studies, vol. 30(1), pages 17-30, March.
    4. Ray Barrell & Dawn Holland & Ian Hurst, 2012. "Fiscal Consolidation: Part 2. Fiscal Multipliers and Fiscal Consolidations," OECD Economics Department Working Papers 933, OECD Publishing.
    5. Ray Barrell & Martin Weale, 2009. "The Economics of a Reduction in VAT," Fiscal Studies, Institute for Fiscal Studies, vol. 30(1), pages 17-30, March.
    6. Ray Barrell & E. Philip Davis, 2007. "Financial Liberalisation, Consumption And Wealth Effects In Seven Oecd Countries," Scottish Journal of Political Economy, Scottish Economic Society, vol. 54(2), pages 254-267, May.
    7. Barrell, R. & Hall, S.G. & Hurst, I., 2006. "Evaluating policy feedback rules using the joint density function of a stochastic model," Economics Letters, Elsevier, vol. 93(1), pages 1-5, October.
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