Gilbert E. Metcalf

Metcalf's early research focused on the fiscal interaction between federal tax policy and state and local government budgets. An early paper with Martin Feldstein challenged the view that eliminating the federal deduction for state and local taxes would affect overall spending at the state and local level. The paper did find that sub-national governments would change their portfolio of tax collections to rely less heavily on taxes that are no longer deductible and more heavily on those taxes that continue to be deductible, including business taxes.[7] Metcalf also wrote a series of papers on the role of tax-exempt financing in state and local borrowing.[8][9][10] Metcalf subsequently wrote a series of papers on value-added taxation that argued, among other things, that standard distributional analyses overstate the regressivity of a VAT tax.[11][12][13] Another set of papers focused on the role of uncertainty in tax policy and its impact on investment using stochastic calculus techniques and the work by Robert Pindyck and Avinash Dixit on irreversible investment in the face of uncertainty.[14][15][16]

In the early 1990s, Metcalf, in a series of papers with Kevin Hassett, assessed the role of federal tax policy to encourage greater energy efficiency investments in which they challenged the view that high hurdle rates for these investments reflected a market failure. They argued that a variety of alternative explanations could explain the slow take-up of energy efficient capital and that the case for a market failure necessitating government intervention had not been made.[17][18][19] Metcalf has gone on to write other papers arguing for the role of tax policy to address market failures such as pollution that could incentivize investments in energy efficiency.[20][21] Along with Don Fullerton, Metcalf has written a series of papers examining the optimal tax on pollution in a second-best world (the double dividend hypothesis). Their work focused on the role of scarcity rents to explain why the optimal tax on pollution should be less than the marginal damages from the pollutant.[22][23] Other research focuses on energy security, and subsidies for energy investment and production.[24][25][26][27] In one recent paper, Metcalf argues that eliminating tax incentives for oil and gas production would save roughly $4 billion a year for the federal government and have a negligible impact on energy prices and domestic production.[28][29]

Recently, Metcalf has focused on policy design and evaluation to address climate change. His extensive work on carbon taxation has been highly cited.[30] He has written papers on the distributional burden of carbon taxes, arguing that the view that carbon taxes are regressive is incorrect when 1) lifetime incidence is considered; and 2) the use of proceeds from the tax is taken into account.[31][32][33] In particular, he has argued for a revenue neutral carbon tax to avoid conflating issues of the appropriate size of the federal budget and climate policy.[34][35] Recent work focuses on how a carbon tax can be designed to provide some assurance that emission reduction targets will be met over time.[36][37] In particular, he has advocated for an emissions assurance mechanism (EAM) to address concerns that a carbon tax will not necessarily reduce emissions.[38] The Climate Leadership Council has included an EAM as part of its plan.[39] Other climate related work focuses on international linkage of regional climate policies[40][41][42] and the role of integrated assessment models in climate policy design.[43]