Dynamic Interactions Among the Carbon Market, Commodity Market, and Climate Policy Uncertainty: A Wavelet-based Analysis

Zixuan Zhang ()
Additional contact information
Zixuan Zhang: Central University of Finance and Economics

A chapter in Proceedings of the 2026 11th International Conference on Social Sciences and Economic Development (ICSSED 2026), 2026, pp 351-363 from Springer

Abstract: Abstract This study examines how China’s carbon market, commodity market, and climate policy uncertainty interact with each other, particularly in the context of the country’s dual-carbon objectives. Using continuous wavelet transform (CWT) and wavelet coherence (WC) methods on data from January 2016 through August 2024, the analysis picks out volatility patterns and cross-market linkages that operate at different time scales. The results indicate that carbon price movements tend to cluster in shorter time frames and are heavily influenced by policy changes, while commodity market volatility follows longer cycles driven by broader macroeconomic trends and geopolitical events. A robust long-run positive comovement emerges between the carbon and commodity markets—with commodity prices consistently leading—while a sustained negative association characterizes the carbon market’s long-term relationship with climate policy uncertainty. Around 2023, however, this linkage turns positive over short horizons. These findings highlight why regulatory clarity and coordination across markets matter for keeping extreme price swings in check. The paper suggests improving policy transparency and setting up real-time information sharing to help carbon prices better reflect underlying fundamentals and reduce lags in responding to policy signals. By mapping out these shifting cross-market dependencies over time, the research offers practical guidance for designing more effective carbon markets amid ongoing economic transformation.

Keywords: Carbon market; Commodity market; CPU; Wavelet coherence (search for similar items in EconPapers)
Date: 2026
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:advbcp:978-94-6239-701-9_37

Ordering information: This item can be ordered from
http://www.springer.com/9789462397019

DOI: 10.2991/978-94-6239-701-9_37

Access Statistics for this chapter

More chapters in Advances in Economics, Business and Management Research from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().