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Do firm credit constraints impair climate policy?

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Bibliographic Details
Authors and Corporations: Kaldorf, Matthias (Author), Shi, Mengjie (Author)
Other Authors: Shi, Mengjie [Author]
Type of Resource: E-Book
Language: English
published:
Frankfurt am Main Deutsche Bundesbank [2024]
Series: Deutsche Bundesbank: Discussion paper ; no 2024, 29
Subjects:
Climate Policy
Credit Constraints
Emission Reduction
Corporate Capital Structure
Firm Heterogeneity
Graue Literatur
Source: Verbunddaten SWB
Lizenzfreie Online-Ressourcen
ISBN: 9783988480040
Description
Summary: This paper shows that firm credit constraints impair climate policy. Empirically, firms with tighter credit constraints, measured by their distanceto-default, exhibit a relatively smaller emission reduction after a carbon tax increase. We incorporate this channel into a quantitative DSGE model with endogenous credit constraints and carbon taxes. Credit frictions reduce the optimal investment into emission abatement since shareholders are less likely to receive the payoff from such an investment. We find that carbon taxes consistent with net zero emissions are 24 dollars/ton of carbon larger in the presence of endogenous credit constraints than in an economy without such frictions.
Physical Description: 1 Online-Ressource (circa 48 Seiten); Illustrationen
ISBN: 9783988480040