NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
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Sharat Ganapati

Georgetown University
Edward B. Bunn, S.J. Intercultural Center
37th and O Streets, NW
Washington, DC 20057

E-Mail: EmailAddress: hidden: you can email any NBER-related person as first underscore last at nber dot org
Institutional Affiliation: Georgetown University

NBER Working Papers and Publications

May 2016Energy Cost Pass-Through in U.S. Manufacturing: Estimates and Implications for Carbon Taxes
with Joseph S. Shapiro, Reed Walker: w22281
This paper studies how changes in energy input costs for U.S. manufacturers affect the relative welfare of manufacturing producers and consumers (i.e., incidence). In doing so, we develop a novel partial equilibrium methodology designed to estimate the incidence of input taxes. This method simultaneously accounts for three determinants of incidence that are typically studied in isolation: incomplete pass-through of input costs, differences in industry competitiveness, and substitution amongst inputs used for production. We apply this methodology to a set of U.S. manufacturing industries for which we observe plant-level unit prices and input choices. We find that about 70 percent of energy price-driven changes in input costs are passed through to consumers in the short- to medium-run. We co...
 
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