Work Package 4: Analysis of the Effect of a Carbon Tax in Austria


In Work Package 4, the WIFO-"DYNK" (Dynamic New Keynesian) Model is used to assess carbon tax scenarios for Austria. The DYNK model traces the interlinkages between 62 industries (NACE rev. 2) as well as the consumption of five household income groups using 47 consumption categories. The model is organized in 8 modules that are displayed as boxes in the following simplified scheme of DYNK.

Simplified scheme of DYNK

Simplified scheme of DYNK

Each module contains a range of specific datasets and partly econometric estimated equations. In the CATs project, the emphasis lies on the detailed modelling of private consumption. In this module, the DYNK model enables the implementation of energy / CO2 taxation with specific designs that take into account issues of technology choice as well as of income distribution:

For the tax recycling a differentiation between income quintiles will be implemented to mitigate the negative effects for lower incomes.

Last update: 6 April 2016