Carbon tax in a stock-flow consistent model: The role of commercial banks in financing low-carbon transition

Xiaoyun Xing, Huanxue Pan and Jing Deng

Finance Research Letters, 2022, vol. 50, issue C

Abstract: With the purpose of performing a simple and original analysis on the impact of carbon tax on low-carbon transition, this paper presents a stock-flow consistent model, paying special attention to the role of commercial banks. Through theoretical analysis, we find that the reduction effect of carbon tax on carbon emissions is amplified by commercial banks via financing more green investments. Moreover, such effect is altered by commercial banks’ capability to issue green loans. The results obtained in this paper facilitate the understandings about carbon tax and its coordination with bank-centered financial policies.

Keywords: Carbon tax; Low-carbon transition; Green credit; Stock-flow consistent approach (search for similar items in EconPapers)
JEL-codes: C61 G21 H23 Q57 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:50:y:2022:i:c:s1544612322003920

DOI: 10.1016/j.frl.2022.103186

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