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Macro-economic and Sectoral Effects of Carbon Taxes: A General Equilibrium Analysis for China

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  • Zhongxiang Zhang

Abstract

This paper analyzes the macro-economic and sectoral effects of carbon taxes imposed to achieve predefined carbon dioxide (CO2) emission targets for China, by using a dynamic computable general equilibrium model of the Chinese economy. Following a brief introduction of the model, the baseline scenario for the Chinese economy until 2010 is developed under a set of assumptions about the exogenous variables. Next, the paper analyzes the economic implications of two less restrictive scenarios under which China's CO2 emissions in 2010 are cut by 20% and 30%, respectively, relative to the baseline, assuming that carbon tax revenues are retained by the government. Then, the efficiency improvements are computed for four indirect tax-offset scenarios relative to the two tax-retention scenarios already considered. The paper ends with some remarks on constructing a social accounting matrix for China and suggestions for further work to enrich the policy relevance of this study.

Suggested Citation

  • Zhongxiang Zhang, 1998. "Macro-economic and Sectoral Effects of Carbon Taxes: A General Equilibrium Analysis for China," Economic Systems Research, Taylor & Francis Journals, vol. 10(2), pages 135-159.
  • Handle: RePEc:taf:ecsysr:v:10:y:1998:i:2:p:135-159
    DOI: 10.1080/09535319808565471
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    References listed on IDEAS

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    1. Jean-Marc Burniaux & John P. Martin & Giuseppe Nicoletti & Joaquim Oliveira Martins, 1992. "GREEN a Multi-Sector, Multi-Region General Equilibrium Model for Quantifying the Costs of Curbing CO2 Emissions: A Technical Manual," OECD Economics Department Working Papers 116, OECD Publishing.
    2. Alan Manne & Richard Richels, 1992. "Buying Greenhouse Insurance: The Economic Costs of CO2 Emission Limits," MIT Press Books, The MIT Press, edition 1, volume 1, number 026213280x, January.
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    Cited by:

    1. repec:spr:jecstr:v:6:y:2017:i:1:d:10.1186_s40008-017-0091-x is not listed on IDEAS
    2. Alberto Gago & Xavier Labandeira & Xiral López Otero, 2014. "A Panorama on Energy Taxes and Green Tax Reforms," Hacienda Pública Española, IEF, vol. 208(1), pages 145-190, March.
    3. Zhang, Zhong Xiang, 2001. "Why has the energy intensity fallen in China's industrial sector in the 1990s?: the relative importance of structural change and intensity change," CDS Research Reports 200111, University of Groningen, Centre for Development Studies (CDS).
    4. Tarancon, Miguel Angel & Del Río, Pablo, 2012. "Assessing energy-related CO2 emissions with sensitivity analysis and input-output techniques," Energy, Elsevier, vol. 37(1), pages 161-170.
    5. Sam Meng & Mahinda Siriwardana & Judith McNeill, 2013. "The Environmental and Economic Impact of the Carbon Tax in Australia," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 54(3), pages 313-332, March.
    6. Lecca, Patrizio & Swales, Kim & Turner, Karen, 2011. "An investigation of issues relating to where energy should enter the production function," Economic Modelling, Elsevier, vol. 28(6), pages 2832-2841.
    7. Christian Lutz, 2000. "NO x Emissions and the Use of Advanced Pollution Abatement Techniques in West Germany," Economic Systems Research, Taylor & Francis Journals, vol. 12(3), pages 305-318.
    8. Samuel Meng, 2015. "Is the agricultural industry spared from the influence of the Australian carbon tax?," Agricultural Economics, International Association of Agricultural Economists, vol. 46(1), pages 125-137, January.
    9. repec:eee:eneeco:v:69:y:2018:i:c:p:213-224 is not listed on IDEAS
    10. Jorge Alarcon & Jan Van Heemst & Niek De Jong, 2000. "Extending the SAM with Social and Environmental Indicators: An Application to Bolivia," Economic Systems Research, Taylor & Francis Journals, vol. 12(4), pages 473-496.
    11. Rueda-Cantuche, José M. & Amores, Antonio F., 2010. "Consistent and unbiased carbon dioxide emission multipliers: Performance of Danish emission reductions via external trade," Ecological Economics, Elsevier, vol. 69(5), pages 988-998, March.
    12. Masoud Yahoo & Jamal Othman, 2017. "Carbon and energy taxation for CO2 mitigation: a CGE model of the Malaysia," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 19(1), pages 239-262, February.
    13. Xu, Zhongmin & Cheng, Guodong & Chen, Dongjin & Templet, Paul H., 2002. "Economic diversity, development capacity and sustainable development of China," Ecological Economics, Elsevier, vol. 40(3), pages 369-378, March.

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