Can carbon reduction credit achieve the win-win of carbon emission reduction and stabilizing economic growth? E-DSGE simulation under the path of green technology innovation
IntroductionAddressing global climate change urgently requires worldwide collaborative efforts. Balancing the dialectical relationship between economic growth stabilization and carbon emission reduction has become a core challenge for China in advancing green, high-quality development. As evidenced...
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Frontiers Media S.A.
2025-06-01
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| Series: | Frontiers in Environmental Science |
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| Online Access: | https://www.frontiersin.org/articles/10.3389/fenvs.2025.1597027/full |
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| author | Chen Bian Zongyi Chen Zhiguo Fan Yuyong Tan |
| author_facet | Chen Bian Zongyi Chen Zhiguo Fan Yuyong Tan |
| author_sort | Chen Bian |
| collection | DOAJ |
| description | IntroductionAddressing global climate change urgently requires worldwide collaborative efforts. Balancing the dialectical relationship between economic growth stabilization and carbon emission reduction has become a core challenge for China in advancing green, high-quality development. As evidenced by practice, policy-driven green technology innovation constitutes the key pathway to resolve this development challenge.MethodsTo evaluate the policy effects of carbon taxes and carbon reduction credit, this study develops an Environmental Dynamic Stochastic General Equilibrium (E-DSGE) framework, integrating parameter calibration with Bayesian estimation methods to systematically simulate the dynamic responses of macroeconomic variables to carbon tax and carbon reduction credit shocks.Results(1) carbon reduction credit demonstrates superior policy efficacy compared to carbon tax mechanisms. Aligning with the neoclassical “compliance cost” framework, the carbon tax exhibits weaker incentives for green technology innovation and less balanced carbon reduction-growth coordination than carbon reduction credit. (2) supporting policies—such as tax cuts, fiscal expenditure expansion, and monetary tools like central bank lending rate cuts and reserve requirement ratio reductions—can significantly enhance the implementation effectiveness of carbon reduction credit. (3) the coordinated implementation of carbon reduction policies and macro-control policies yields stronger outcomes in both emission reduction and growth stabilization than standalone policies, while generating positive social welfare spillover effects.DiscussionOur paper offers new perspectives for green finance theory and public policy research. It validate the strategic value of carbon reduction credit mechanisms in advancing China’s sustainable development, providing an innovative policy tool for resolving the tension between environmental governance and economic growth. |
| format | Article |
| id | doaj-art-893070910d2b4e9cb44586a2ba2b40ff |
| institution | Kabale University |
| issn | 2296-665X |
| language | English |
| publishDate | 2025-06-01 |
| publisher | Frontiers Media S.A. |
| record_format | Article |
| series | Frontiers in Environmental Science |
| spelling | doaj-art-893070910d2b4e9cb44586a2ba2b40ff2025-08-20T03:24:51ZengFrontiers Media S.A.Frontiers in Environmental Science2296-665X2025-06-011310.3389/fenvs.2025.15970271597027Can carbon reduction credit achieve the win-win of carbon emission reduction and stabilizing economic growth? E-DSGE simulation under the path of green technology innovationChen Bian0Zongyi Chen1Zhiguo Fan2Yuyong Tan3Economics Management College, Weifang University of Science and Technology, Weifang, ChinaSchool of Finance, Qilu University of Technology, Jinan, ChinaEconomics Management College, Weifang University of Science and Technology, Weifang, ChinaEconomics Management College, Weifang University of Science and Technology, Weifang, ChinaIntroductionAddressing global climate change urgently requires worldwide collaborative efforts. Balancing the dialectical relationship between economic growth stabilization and carbon emission reduction has become a core challenge for China in advancing green, high-quality development. As evidenced by practice, policy-driven green technology innovation constitutes the key pathway to resolve this development challenge.MethodsTo evaluate the policy effects of carbon taxes and carbon reduction credit, this study develops an Environmental Dynamic Stochastic General Equilibrium (E-DSGE) framework, integrating parameter calibration with Bayesian estimation methods to systematically simulate the dynamic responses of macroeconomic variables to carbon tax and carbon reduction credit shocks.Results(1) carbon reduction credit demonstrates superior policy efficacy compared to carbon tax mechanisms. Aligning with the neoclassical “compliance cost” framework, the carbon tax exhibits weaker incentives for green technology innovation and less balanced carbon reduction-growth coordination than carbon reduction credit. (2) supporting policies—such as tax cuts, fiscal expenditure expansion, and monetary tools like central bank lending rate cuts and reserve requirement ratio reductions—can significantly enhance the implementation effectiveness of carbon reduction credit. (3) the coordinated implementation of carbon reduction policies and macro-control policies yields stronger outcomes in both emission reduction and growth stabilization than standalone policies, while generating positive social welfare spillover effects.DiscussionOur paper offers new perspectives for green finance theory and public policy research. It validate the strategic value of carbon reduction credit mechanisms in advancing China’s sustainable development, providing an innovative policy tool for resolving the tension between environmental governance and economic growth.https://www.frontiersin.org/articles/10.3389/fenvs.2025.1597027/fullcarbon reduction creditcarbon taxgreen technology innovationstabilizing growth effectcarbon reduction effect |
| spellingShingle | Chen Bian Zongyi Chen Zhiguo Fan Yuyong Tan Can carbon reduction credit achieve the win-win of carbon emission reduction and stabilizing economic growth? E-DSGE simulation under the path of green technology innovation Frontiers in Environmental Science carbon reduction credit carbon tax green technology innovation stabilizing growth effect carbon reduction effect |
| title | Can carbon reduction credit achieve the win-win of carbon emission reduction and stabilizing economic growth? E-DSGE simulation under the path of green technology innovation |
| title_full | Can carbon reduction credit achieve the win-win of carbon emission reduction and stabilizing economic growth? E-DSGE simulation under the path of green technology innovation |
| title_fullStr | Can carbon reduction credit achieve the win-win of carbon emission reduction and stabilizing economic growth? E-DSGE simulation under the path of green technology innovation |
| title_full_unstemmed | Can carbon reduction credit achieve the win-win of carbon emission reduction and stabilizing economic growth? E-DSGE simulation under the path of green technology innovation |
| title_short | Can carbon reduction credit achieve the win-win of carbon emission reduction and stabilizing economic growth? E-DSGE simulation under the path of green technology innovation |
| title_sort | can carbon reduction credit achieve the win win of carbon emission reduction and stabilizing economic growth e dsge simulation under the path of green technology innovation |
| topic | carbon reduction credit carbon tax green technology innovation stabilizing growth effect carbon reduction effect |
| url | https://www.frontiersin.org/articles/10.3389/fenvs.2025.1597027/full |
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