Conference Agenda
Overview and details of the sessions of this conference. Please select a date or location to show only sessions at that day or location. Please select a single session for detailed view (with abstracts and downloads if available).
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Daily Overview |
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Dynamics and Welfare Location: B133 Session Chair: Simon Lang, ETH Zurich | |
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Carbon Pricing and the EU-China Trade Balance: The Role of Alternative Policy Regimes in an Open-Economy DSGE Model Tor Vergata Rome University, Italy This paper develops a three-region open-economy DSGE model, calibrated to 2023 data for the European Union and China, to study how alternative carbon-pricing regimes shape the bilateral trade balance. Energy enters both production and household consumption, while a third region supplies oil and natural gas on integrated world markets and participates in international asset trading. We simulate a tightening of the EU ETS1 cap and compare alternative coverage of household and Chinese industrial emissions, as well as the introduction of a carbon border adjustment mechanism. A tighter EU cap raises domestic carbon costs, lowers European fossil-fuel demand, and depresses world fuel prices, improving Chinese cost competitiveness and worsening the EU--China trade balance. Extending coverage to household emissions through ETS2 amplifies this effect by preventing a domestic fossil-fuel rebound. By contrast, whether China uses a tax or an ETS has little quantitative influence. A CBAM raises the landed price of Chinese goods, limits import substitution, attenuates the short-term deterioration of the trade-balance and modestly reduces carbon leakage. | |