Carbon reduction, transition risks and macroeconomic volatility

• 1、Hunan Normal University Business School,Changsha 410081

Abstract：Over the years, the problems caused by climate change have gradually become the focus of social concern. In 2020, China put forward a solemn commitment to peak carbon dioxide emissions before 2030 and strive to achieve carbon neutrality before 2060. Based on the "dual carbon" goal, actively implementing carbon emission reduction policies and promoting green transformation are the only way to achieve the dual carbon goals, and the transition risks brought about in the implementation of carbon emission reduction policies have a certain impact on macroeconomic fluctuations and financial stability. Based on this, this paper constructs a DSGE model that includes carbon emission reduction policies, heterogeneous firms and financial frictions to explore the impact of carbon emission reduction policies on China\'s finance and macroeconomy. The results show that: (1) technological progress will promote long-term economic improvement, reduce carbon emissions, improve environmental quality, reduce green asset leverage and bank leverage, and mitigate risks; (2) Technological progress on carbon emissions also reduces carbon emissions, promotes economic development, reduces economic risks, and ensures financial stability. Technological advances and carbon emissionsTechnological advances can achieve the win-win goals of economic growth, improved environmental quality, and financial stability; (3) The impact of carbon tax has obvious effect on emission reduction, but the cost will cause economic contraction and bring transition risks.

Keywords： Carbon reduction；transition risks ；macroeconomic volatility；DSGE