Per KrusellProfessor
About me
Per Krusell is the Torsten and Ragnar Söderberg Chair in Economics at the Institute for International Economic Studies at Stockholm University. He is a Fellow of the Econometric Society and holds a PhD in Economics from the University of Minnesota. He was the President of the European Economic Association in 2020 and he is currently the Secretary of the Prize Committee for The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel. Per Krusell has made fundamental contributions to many areas of macroeconomics including incomplete markets and inequality, political economy and optimal policy making in dynamic models, labor, technological change, and the macroeconomics of climate change.
Publications
A selection from Stockholm University publication database
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Optimal Taxes on Fossil Fuel in General Equilibrium
2014. Mikhail Golosov (et al.). Econometrica 82 (1), 41-88
ArticleRead more about Optimal Taxes on Fossil Fuel in General EquilibriumWe analyze a dynamic stochastic general-equilibrium (DSGE) model with an externality—through climate change—from using fossil energy. Our central result is a simple formula for the marginal externality damage of emissions (or, equivalently, for the optimal carbon tax). This formula, which holds under quite plausible assumptions, reveals that the damage is proportional to current GDP, with the proportion depending only on three factors: (i) discounting, (ii) the expected damage elasticity (how many percent of the output flow is lost from an extra unit of carbon in the atmosphere), and (iii) the structure of carbon depreciation in the atmosphere. Thus, the stochastic values of future output, consumption, and the atmospheric CO2 concentration, as well as the paths of technology (whether endogenous or exogenous) and population, and so on, all disappear from the formula. We find that the optimal tax should be a bit higher than the median, or most well-known, estimates in the literature. We also formulate a parsimonious yet comprehensive and easily solved model allowing us to compute the optimal and market paths for the use of different sources of energy and the corresponding climate change. We find coal—rather than oil—to be the main threat to economic welfare, largely due to its abundance. We also find that the costs of inaction are particularly sensitive to the assumptions regarding the substitutability of different energy sources and technological progress.
Show all publications by Per Krusell at Stockholm University