Impact of Economic Policy Uncertainty on Chinese Carbon Price
International Journal of Economy, Energy and Environment
Volume 4, Issue 1, February 2019, Pages: 18-23
Received: Jan. 23, 2019; Accepted: Mar. 12, 2019; Published: Mar. 30, 2019
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Chen Ling-Ling, School of Economics, Hefei University of Technology, Hefei, China
Wang Wen-Jun, School of Economics, Hefei University of Technology, Hefei, China
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There are direct as well as indirect linkages between economic policy uncertainty and carbon market through the channels of market fundamentals. This paper theoretically analyzes the linkages between economic policy uncertainty and carbon price and empirically examines the impact of Chinese economic policy uncertainty on Hubei carbon prices. A two-regime Markov-Switching process is introduced into the VAR model to examine the impact of economic policy uncertainty during different regimes of the carbon market. The empirical results show that the two-regime Markov-Switching model applies well in modelling the return series from Hubei carbon market during April 2014 to December 2017. Under the two different regimes, although the impacts from economic policy uncertainty are both significantly positive, the magnitude of the impacts differs. The impact of Chinese economic policy uncertainty on Hubei carbon price is larger during the low volatility period on carbon market than that during the high volatility period on carbon market.
Economic Policy Uncertainty, Carbon Market, Markov Regime Switching, Impulse Response Function
To cite this article
Chen Ling-Ling, Wang Wen-Jun, Impact of Economic Policy Uncertainty on Chinese Carbon Price, International Journal of Economy, Energy and Environment. Vol. 4, No. 1, 2019, pp. 18-23. doi: 10.11648/j.ijeee.20190401.13
Copyright © 2019 Authors retain the copyright of this article.
This article is an open access article distributed under the Creative Commons Attribution License ( which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
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