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Carbon Emission Reduction Effect of RMB Appreciation: Empirical Evidence from 283 Prefecture-Level Cities of China

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  • Chen Fengxian
  • Lv Xiaoyao

Abstract

Based on the panel data of 283 prefecture-level cities in China from 2006 to 2019, this paper measures the extent and mechanism of the impact of RMB real effective exchange rate fluctuations on carbon emission intensity. The results show that: (1) For every 1% appreciation of the real effective exchange rate of RMB, the carbon emission intensity decreases by an average of 0.463 tons/10000 yuan; (2) The "carbon emission reduction effect" of RMB real effective exchange rate appreciation is more obvious in the eastern regions, coastal areas, regions with high urbanization levels, and areas with open information; (3) The appreciation of RMB real effective exchange rate can reduce carbon dioxide emission intensity by improving regional R&D and innovation ability, restraining foreign trade and foreign investment, promoting industrial structure optimization and upgrading, and improving income inequality.

Suggested Citation

  • Chen Fengxian & Lv Xiaoyao, 2023. "Carbon Emission Reduction Effect of RMB Appreciation: Empirical Evidence from 283 Prefecture-Level Cities of China," Papers 2305.01558, arXiv.org.
    • Handle: RePEc:arx:papers:2305.01558
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