The Effects of Gasoline Taxes and Efforts to Curb Carbon Dioxide Emissions
There are three chapters in my dissertation. In two of the three chapters, I use panel analysis and an event study to examine the short-run and long-run impacts of state gasoline taxes, respectively. In another chapter I track the -convergence of global carbon dioxide emissions, in order to tease out the effects of the Kyoto Protocol on multilateral environmental cooperation. The first chapter examines short-run pass-through rates of state excise gasoline taxes using monthly data for US states from 1987-2011. We consider several factors that may affect pass- through, including neighbor states, commuting patterns like miles travelled per person per day, the percentage of people who commute by public transportation or work from home. We also examine the asymmetric effects of tax increases versus tax decreases on pass-through. We find state gasoline excise taxes are fully shifted to consumers, while wholesale prices are partially shifted to retail prices, indicating that suppliers digest the increased input cost, but not the increased tax burden. We also find a tax increase and a tax decrease have asymmetric effects on pass-through when gasoline production is near capacity. More specifically, when supply is highly constrained, the pass-through of a tax cut is only one third, while that of a tax increase is one. In other words, when capacity constraints are binding, most of the benefits from a tax decrease accrue to suppliers, while nearly all tax burdens from a tax increase accrue to consumers. Furthermore, the pass-through rates decrease for the states with more neighbors, implying that residents may avoid taxes by purchasing gasoline from neighboring states. Finally, we find a state-level price elasticity of gasoline demand of . The second chapter uses a weak -convergence method to examine the convergence of carbon dioxide emissions per capita for a global sample of 152 countries for the time period 1960–2014. We find evidence of convergence for both an OECD sample and a global sample. The global convergence in emissions is mainly attributable to the strong convergence pattern for non-OECD countries after 1997. This provides evidence that the Kyoto Protocol contributed to the convergence in global CO2 emissions. The third chapter uses state-level monthly dataset and a long-run event study to examine the effects of state tax increases on future gasoline retail prices. Each tax increase is used as a data point to develop a SUR model (Seemingly Unrelated Regressions) with wholesale prices working as the control to investigate the changes in retail prices for the next ten months after events. I find that the events cause a temporary decline in future retail prices for the next four months, and higher tax increases cause bigger decline. In other words, the abnormal returns resulting from the events take about five month to recover.