This paper constructs an open economy dynamic stochastic general equilibrium (DSGE) model with oil to investigate the transmission mechanism and impact effects of oil price fluctuations driven by different factors on China’s macroeconomy using quarterly data from 1996 to 2019. The results show that the international crude oil supply-driven oil price decline promotes positive output growth in the short run through the positive cost effect of the supply channel, and the production regulation cost will dampen the incentive to invest in the new energy sector in the long run. Domestic economic development demand-driven oil price increases act on the demand channel, driving output and oil prices to fluctuate in the same direction, generating a negative real balance effect on the economy through the interest rate channel. The oil-specific demand driven by foreign nominal interest rate shocks is transmitted through the exchange rate channel, triggering imported inflation, lower aggregate demand, and lower output. Different sources of oil price fluctuations have different transmission mechanisms and thus differential effects. For this reason, based on the root causes of oil price fluctuations, policy recommendations to deal with international oil price fluctuations in the new situation are proposed at the supply level, demand level, and international level.

With the rapid economic growth, environmental problems have become a significant bottleneck restricting the high-quality development of China’s economy. In the fiscal decentralization system, balancing economic growth and environmental governance is an issue that needs to be paid attention to in fiscal policy. This paper studies the impact of fiscal decentralization on the environmental policy in China. We incorporate the central and local government structure into a standard environmental dynamic stochastic general equilibrium (E-DSGE) model. The economy was featured with multiple-level governments where the local governments implement fiscal policies through the trade-off between pursuing economic growth and environmental governance. The results indicate that implementing a carbon emission tax is not conducive to economic growth but helps reduce environmental pollution. Second, deepening fiscal decentralization has heterogeneous effects on central and local fiscal expenditures. Deepening fiscal decentralization strengthens the positive externality of local government expenditures to output, but it also leads to further deterioration of environmental pollution. The positive externality of the central government expenditures will weaken with the increase in fiscal decentralization, but it is conducive to improving the quality of the environment. Third, deepening fiscal decentralization is conducive to improving social welfare and alleviating environmental pollution. If the local government fiscal expenditures are biased toward environmental governance expenditures, this is beneficial to improve social welfare and the quality of the environment.

Green innovations such as renewable energy technologies and cleaner process modifications are important technical routes and critical directions for reducing carbon emissions from industrial production processes. This study examines the impact of intellectual property protection on green technology innovation, constructing a progressive difference-in-differences model using 849 listed manufacturing firms panel data from 2007 to 2019 and taking the Chinese Intellectual Property Rights model cities as a quasi-natural experiment. Our study finds that the pilot policy significantly enhances corporate green innovation. When considering heterogeneity, the policy treatment effect is more remarkable for large firms, state-owned enterprises, and industries where technology can be easily imitated. Moreover, the mediating effect shows that the policy promotes green innovation by encouraging firms’ research and development cooperation and increasing human capital levels. This study proposes that policymakers should reinforce intellectual property protection, encourage companies to be better and bigger, and emphasize the intermediary function of open innovation and human capital in green technology innovation.

In this paper, we develop a contingent claim model to evaluate a bank’s equity and liabilities that integrates the premature default risk conditions with loan rate-setting behavioral mode and multiple shadow banking activities under capital regulation. The barrier options theory of corporate security valuation is applied to the contingent claims of a bank. The barrier reports that default can occur at any time before the maturity date. We focus on a type of earning-asset portfolio, consisting of balance-sheet banking activities of loans and liquid assets and shadow banking activities of wealth management products (WMPs) and entrusted loans (ELs). The optimal bank interest margin, i.e., the spread between the loan rate and the deposit rate, is derived and analyzed. The results provide an alternative explanation for the decline in bank interest margins, which better fits the narrative evidence on bank spread behavior under capital regulation in particular during a financial crisis. Raising either WMPs or ELs leads to a transfer of wealth from equity holders to the debt holders, and hence increases the deposit insurance liabilities. We also show that the multiple shadow banking activities of WMPs and ELs captured by scope equities may produce superior return performance for the bank. Tightened capital requirements may reinforce the superior return performance by a surge in shadow banking activities that makes the bank less prudent and more prone to risk-taking at a reduced margin, thereby adversely affecting banking stability. We demonstrate that financial disturbance may be created because of the potential for shadow banking activities to spill over to regular banking activities and damage the real economy.