Tourism economic dynamics under carbon intensity target policy

This article examines the tourism economic dynamics under the carbon intensity target policy with macroeconomic uncertainty. Using a novel multi-sector dynamic stochastic general equilibrium model, this article presents the impulse responses of the tourism economy to productivity shocks and carbon intensity target shocks in terms of output, employment, and consumption. The results show that, generally, productivity shocks have positive effects while carbon intensity target shocks negatively affect the tourism aggregate economy. The reduced carbon intensity target offsets these positive effects as well as enlarging these negative effects. Furthermore, the effects of exogenous shocks vary significantly across tourism sectors. As a whole, tourism-related transport and accommodation sectors are the most affected. In addition, different carbon intensity targets mean the different volatility and persistence of the effects of exogenous shocks. This study contributes to a better understanding of tourism economic dynamics under a specific emissions policy, thereby contributing to relevant decision-making.