Green Fiscal and Tax Policies in China: An Environmental Dynamic Stochastic General Equilibrium Approach
Abstract
:1. Introduction
2. Literature Review
3. The Model
3.1. Production
3.1.1. Final Goods Producers
3.1.2. Retail
3.1.3. Intermediate Goods Producers
3.2. Households
3.3. Evolution Equation for Pollution Stock
3.4. Government Sector
3.5. Market Equilibrium
3.6. External Policy Impact
4. Model Solving and Parameter Calibration
4.1. The Logic of the Model Solving
4.2. Parameter Calibration
Par. | Parameters | Values | Sources |
---|---|---|---|
Household discount factor | 0.99 | Wang et al. [22] | |
Negative utility coefficient for labor | 1 | Wu et al. [39] | |
Negative utility coefficient for pollution emissions | 1 | Wu et al. [39] | |
Elasticity of household labor supply | 1.2 | Blanchard and Galí [41] | |
Energy supply elasticity | 1.5 | Xiao et al. [18] | |
Quadratic portfolio adjustment cost coefficient | 1.8 | Wang et al. [22] | |
Entrepreneur discount factor | 0.98 | Wang et al. [22] | |
Capital share of the production function | 0.33 | Nalban [33] | |
Labor share of the production function | 0.58 | Pop [43] | |
Pollution damage function parameters | 1.395 × 10−3 | Heutel [20] | |
Pollution damage function parameters | −6.6722 × 10−6 | Heutel [20] | |
Pollution damage function parameters | 1.4647 × 10−8 | Heutel [20] | |
Abatement cost function coefficient | 0.185 | Annicchiarico and Di Dio [21] | |
Abatement cost function parameter | 2.8 | Annicchiarico and Di Dio [21] | |
Capital depreciation rate | 0.025 | Heutel [20] | |
Substitution elasticity of intermediate goods | 6 | Xiao et al. [18] | |
Degree of price stickiness | 0.75 | Heutel [20] | |
Emissions per unit of energy | 0.6 | Xiao et al. [18] | |
Degree of financing constraints | 0.45 | Wang et al. [22] | |
Natural attenuation coefficient | 0.005 | Nordhaus [44] | |
Effectiveness coefficient of government spending on pollution treatment | 1.16 | Angelopoulos et al. [19] | |
Labor tax rate | 5.1% | Huang and Zhu [46] | |
Capital tax rate | 26.6% | Huang and Zhu [46] | |
Steady-state value of the energy tax | 11% | Real economic data | |
Steady-state value of environmental tax | 0.06% | Real economic data | |
Steady-state value of the emission reduction subsidy rate | 3% | Cai et al. [25] | |
Steady-state ratio of pollution control expenditure | 2.88% | Real economic data |
5. Results and Discussion
5.1. Economic Effects of Green Fiscal and Taxation Policies
5.1.1. Environmental Tax Policy Uncertainty
5.1.2. Energy Tax Policy Uncertainty
5.1.3. Emissions Reduction Subsidy Policy Uncertainty
5.1.4. Uncertainty of Government Spending on Pollution Treatment
5.2. Welfare Effects of Green Fiscal and Taxation Policies
5.3. Further Discussion: Comparing Welfare Losses from Environmental Taxes and Energy Taxes
5.4. Sensitivity Analysis of the E-DSGE Model
5.4.1. Sensitivity Analysis for Environmental and Energy Tax
5.4.2. Sensitivity Analysis of an Emission Reduction Subsidy and Government Spending on Pollution Treatments
6. Conclusions
Author Contributions
Funding
Institutional Review Board Statement
Informed Consent Statement
Data Availability Statement
Acknowledgments
Conflicts of Interest
Appendix A. Competitive Equilibrium
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Yan, J.; Wang, R. Green Fiscal and Tax Policies in China: An Environmental Dynamic Stochastic General Equilibrium Approach. Sustainability 2024, 16, 3533. https://doi.org/10.3390/su16093533
Yan J, Wang R. Green Fiscal and Tax Policies in China: An Environmental Dynamic Stochastic General Equilibrium Approach. Sustainability. 2024; 16(9):3533. https://doi.org/10.3390/su16093533
Chicago/Turabian StyleYan, Jie, and Ruiliang Wang. 2024. "Green Fiscal and Tax Policies in China: An Environmental Dynamic Stochastic General Equilibrium Approach" Sustainability 16, no. 9: 3533. https://doi.org/10.3390/su16093533