Abstract: China officially implemented the fuel tax in 2009, and has since increased the fuel tax rate three times. To some extent, the imposition of fuel tax helps energy conservation and emission reduction, and hence alleviating environmental pressures. However, it also increases the cost of consumption and production. In the case of firms facing financing constraints, it adds extra financial burdens. According to the World Bank's report, 75% of non-financial listed firms in China list financing constraints as the main obstacle to corporate development, the highest among 80 countries (Claessens and Tzioumis, 2006). Financing constraints has become one of the important bottlenecks restricting China's economic development and transformation. As a tax on corporate financial expenses, fuel tax will inevitably affect the firms' investment and financing behavior, and hence have an impact on the real economy through financial accelerators. The impact of the fuel tax on the household consumption of refined oil products and the investment and production behavior of firms with financing constraints is examined. A stochastic dynamic general equilibrium model with fuel tax and financing constraints is constructed for analysis. The model is embedded with oil inventory and two production sectors, the consumer goods sector and the refined oil sector. The relevant parameters are calibrated and estimated by Bayesian techniques based on the China's macro data from the first quarter of 1995 to the second quarter of 2018. The simulation and comparation analysis are conducted using the tool of Dynare for Matlab. The findings are as follows. First, the imposition of fuel tax has a significant effect on promoting energy conservation and reducing carbon emission. Second, it restrains consumption, investment and output, increases unemployment and hence has a negative impact on the economy. Third, financing constraints can amplify the impact of fuel tax shocks through the role of financial accelerators, and the tighter the financing constraints, the stronger the stimulating effect of reducing fuel tax on the economy. These findings help to understand the transmission mechanism of fuel tax and its impact on the investment and financing behavior of firms with financing constraints, and also provide an analytical tool for relevant policy formulation and simulation.

Key words: DSGE, fuel tax, financing constraints, energy saving and emission reduction