Do carbon taxes bend national emission trajectories? Pre-adoption trends and evidence from ten staggered-adoption estimators, 1980–2025
Karbon vergileri ulusal emisyon patikalarını büker mi? Benimseme öncesi eğilimler ve on kademeli benimseme tahmincisinden kanıt, 1980–2025
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Abstract
Cross-country studies often find that carbon taxes reduce national CO₂ emissions substantially, but adopters may already be on declining emission paths. This paper uses the 2026 release of the EDGAR database (1980–2025) for 156 countries, 26 of which adopted a carbon tax between 1990 and 2024, and compares ten estimators for staggered adoption under a common falsification test that moves each adoption three years earlier and uses only pre-adoption data. Estimators that rely on parallel trends, including heterogeneity-robust difference-in-differences, imputation, local-projection and synthetic difference-in-differences estimators, imply that adoption reduced emissions by 16–29 log points on average over the first decade, but all of them also find reductions of 6–38 log points in the three years before adoption. Adopters' emissions were already falling relative to those of other countries. Only the two estimators that model country-specific trajectories, cohort-specific linear trends and an interactive fixed effects counterfactual, pass the test; they yield effects of +2.6 (95% CI −4.0 to 11.2) and −2.8 (−17.9 to 15.5) log points. The interactive fixed effects estimator also passes a placebo-outcome test on agricultural methane, which the linear-trend estimator fails. Neither sectoral nor price-group estimates show robust reductions, and country-level effects do not increase with the tax rate. At the rates adopted so far, a median of US$4 per tonne in the first decade, carbon taxes have not detectably bent national trajectories beyond pre-existing trends. The results caution against inferring policy effectiveness from parallel-trends estimates and support pricing at levels and coverage that can shift trajectories.
Keywords
Carbon tax; CO₂ emissions; Staggered difference-in-differences; Interactive fixed effects; Synthetic difference-in-differences; Falsification test; Policy evaluation
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