{"title":"Climate policy and China's external balances","authors":"","doi":"10.1016/j.ememar.2024.101216","DOIUrl":null,"url":null,"abstract":"<div><div>To explore the impact of the China Carbon Emissions Trading Exchange (CCETE) on international trade and capital flow, we develop a two-country dynamic general equilibrium model with asymmetric climate policies. We use targets of decreasing carbon emissions intensity to simulate the strengthening of the CCETE policy. We find that the strengthening of climate policy improves China's trade balance and current account. We also find that output and carbon emissions of the rest of the world with a less stringent climate policy increase (known as carbon leakage) in the short run, but decrease (known as positive externalities of climate policy) in the long run. These findings suggest that China could benefit from more stringent climate policy due to the improvement of its external balances, and the world could also benefit due to the mitigation of climate change.</div></div>","PeriodicalId":47886,"journal":{"name":"Emerging Markets Review","volume":null,"pages":null},"PeriodicalIF":5.6000,"publicationDate":"2024-10-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Emerging Markets Review","FirstCategoryId":"96","ListUrlMain":"https://www.sciencedirect.com/science/article/pii/S1566014124001110","RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"BUSINESS, FINANCE","Score":null,"Total":0}
引用次数: 0
Abstract
To explore the impact of the China Carbon Emissions Trading Exchange (CCETE) on international trade and capital flow, we develop a two-country dynamic general equilibrium model with asymmetric climate policies. We use targets of decreasing carbon emissions intensity to simulate the strengthening of the CCETE policy. We find that the strengthening of climate policy improves China's trade balance and current account. We also find that output and carbon emissions of the rest of the world with a less stringent climate policy increase (known as carbon leakage) in the short run, but decrease (known as positive externalities of climate policy) in the long run. These findings suggest that China could benefit from more stringent climate policy due to the improvement of its external balances, and the world could also benefit due to the mitigation of climate change.
期刊介绍:
The intent of the editors is to consolidate Emerging Markets Review as the premier vehicle for publishing high impact empirical and theoretical studies in emerging markets finance. Preference will be given to comparative studies that take global and regional perspectives, detailed single country studies that address critical policy issues and have significant global and regional implications, and papers that address the interactions of national and international financial architecture. We especially welcome papers that take institutional as well as financial perspectives.