An Empirical Analysis of Carbon Emission Price in China

Carbon emission trading, as an effective economic tool to deal with climate change issues, has received widespread attention in recent years. As a major carbon emitter, China plays an important role in global climate change. This paper uses the Vector Error Correction (VEC) model to explore the dynamic relationship between energy price, macroeconomic indicators, air quality, and carbon emission trading price. The results show that there is a long-term equilibrium relationship between these selected indicators and carbon emission trading price. In addition, this paper also uses the Generalized Auto-Regressive Conditional Heteroskedasticity (GARCH) model to analyze the carbon price fluctuation characteristics. It is found that there is a positive leverage effect on the price fluctuation of the selected carbon emission return series. External bad news will have a greater impact on carbon price fluctuation than good news. Copyright (C) 2018 Elsevier Ltd. All rights reserved.