International Transmission of the Business Cycle and Environmental Policy

Barbara Annicchiarico and Francesca Diluiso ()

No 423, CEIS Research Paper from Tor Vergata University, CEIS

Abstract: This paper presents a baseline dynamic general-equilibrium model of environmental policy for a two-country economy and studies the international transmission of several asymmetric shocks considering three different economy-wide greenhouse gases (GHG) emission regulations: (i) national cap-and-trade, (ii) carbon tax, and (iii) international cap-and-trade system allowing for cross-border allocation of emission permits. We find that international spillovers of shocks originated in one country are strongly influenced by the environmental regime put in place. We show that, while a national cap-and-trade system diminishes the international spillovers by dampening the response of the country hit by shocks, the cross-border reaction to supply-side shocks is found to be magnified under an international cap-and-trade system, while demand shocks are more intensively transmitted under a carbon tax. The pattern of trade and the underlying monetary regime in uence the cross-border transmission channels interacting with the environmental policy adopted.

Keywords: Open Economy Macroeconomics; GHG Emission Control; Macroeconomic Dynamics (search for similar items in EconPapers)
JEL-codes: E32 F41 F42 Q58 (search for similar items in EconPapers)
Pages: 46 pages
Date: 2017-12-19, Revised 2017-12-19
New Economics Papers: this item is included in nep-ene, nep-env, nep-mac and nep-res
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://ceistorvergata.it/RePEc/rpaper/RP423.pdf Main text (application/pdf)

Related works:
Journal Article: International transmission of the business cycle and environmental policy (2019)
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:rtv:ceisrp:423

Ordering information: This working paper can be ordered from
CEIS - Centre for Economic and International Studies - Faculty of Economics - University of Rome "Tor Vergata" - Via Columbia, 2 00133 Roma
https://ceistorvergata.it

Access Statistics for this paper

More papers in CEIS Research Paper from Tor Vergata University, CEIS CEIS - Centre for Economic and International Studies - Faculty of Economics - University of Rome "Tor Vergata" - Via Columbia, 2 00133 Roma. Contact information at EDIRC.
Bibliographic data for series maintained by Barbara Piazzi ().