Environmental Regulation,Environmental Protection Technology And Economic Fluctuation

With the development of China's economy,the people's living standards have gradually improved,and the concept of economic development has also been gradually updated,from quantity first to quality first.A high level of environment quality is obviously an important part of high-quality development.However,China's economic development process has made many sacrifices in environmental quality due to various reasons.This kind of growth has brought many problems today.In the pursuit of high-quality development,environmental issues cannot be ignored and need to be urgently resolved.At present,China's economy is now in a new-normal state,and it has shifted from highspeed growth to medium-speed growth.In the case of economic growth slowing down,structural adjustments are still needed,and a series of external uncertainties are also faced.In view of the fact that China's development is still insufficient and uneven,it is still very important to maintain a certain speed and stable economic growth.However,according to existing research,there is a certain trade-off between environmental regulation and short-term economic stability.In the case of environmental problems and necessary economic growth,it seems very important to maintain a certain level of environmental regulation and economic stability.The request theoretically involves two questions: How does environmental regulation affect economic fluctuations? What impact will economic fluctuations have on environmental quality? In this context,this thesis attempts to establish a new Keynesian DSGE model that includes environmental factors,incorporating environmental preferences of households,environmental quality,and exogenous shocks that represent economic fluctuations into the same framework.The thesis intends to answer the two questions above preliminarily.The model constructed in this thesis consists of households,manufacturers,the government,monetary authoritiy,and environmental system.The manufacturers are divided into two categories: one is a final product manufacturer that does not produce pollution,which produces final products for household consumption and is in a completely competitive market structure;the other is an intermediate product manufacturer whose products are the production factors of the final product manufacturer.The production process of the intermediate product manufacturer will discharge pollution in accordance with their output,and the manufacturer will actively reduce emissions under a certain level of incentives.In the study of this thesis,it is assumed that all pollution produced by the intermediate product manufacture is carbon emissions.Households have certain environmental preferences,consume final products and provide labor to the intermediate product manufacturer.The government uses pollution tax as a means of environmental regulation and implements a balanced budget fiscal policy.Its expenditure is only transfer payments to the household sector,and its income comes from pollution taxes collected from intermediate product manufacturers and currency issuances.The monetary authority adopts a monetary policy with a fixed money supply growth rate.The environmental system reflects the dynamic changes in environmental quality.The environmental quality of each period depends on the environmental quality of the previous period,the initial environmental quality without pollution,the level of environmental protection technology,and the current amount of pollution emissions.And the thesis assumes that environmental protection technology is public and has no cost.This looser assumption can be used as a reference for environmental regulation efficiency.Next,the parameters of the model are determined by calibration and Bayesian estimation.After that the thesis performs numerical simulations and impulse response analysis for shocks of production technology level,pollution tax rate,environmental protection technology level,and monetary policy.Based on the results of the impulse response analysis,this the draws the following conclusions:(1)The impact of positive production technology has increased output,increased pollution and reduced environmental quality.It takes a long time for the environmental quality to return to its steady state.Due to the existence of environmental regulations,the output cannot fully respond to the impact of production technology,and it also has a squeeze effect on labor.(2)Increasing the pollution tax rate can greatly reduce the amount of pollution and improve environmental quality.The impulse response analysis shows that the environmental quality is characterized by "easy pollution and difficult control".In the case where there is an incentive for manufacturers to reduce emissions actively,and households 'consumption and environmental quality preferences change in opposite directions,the increase in pollution tax rates has resulted in a small,short-term increase in output,which can be regarded as a “double dividend”.However,under the effect of environmental regulations,it has a certain crowding effect on consumption.(3)The model in this thesis assumes a relatively loose level of environmental protection technology,but the positive impact of the environmental protection technology level has almost no effect on variables other than consumption and environmental quality.Compared with the pollution tax rate,the level of environmental protection technology has less effect on the improvement of environmental quality.Under the environmental preferences of households set in this thesis,the transmission mechanism of environmental protection technology level shock is relatively simple,and it can only affect the economic system through consumption.Therefore,improving environmental quality should start from the production process.(4)The effect of increasing money supply is obvious.Under the setting of sticky prices in this paper,the increase in the money supply has a practical effect,the output,consumption and pollution have all increased significantly,and the environmental quality has therefore declined.With the disappearance of the effect of the increase in the money supply,all major variables have returned to their respective steady states relatively quickly except environmental quality.Finally,based on the results of the impulse response analysis,this thesis puts forward the policy recommendations:(1)Clarifying the main objectives in the short term;(2)Continuing to promote technological progress;(3)Taking environmental compensation when increasing the intensity of environmental regulations;(4)Starting controlling the pollution from producers.