Ef fi ciency of China ? s carbon market: A case study of Hubei pilot market

A better understanding of the carbon market can guide further reforms to improve its functionality. Market efficiency is a key indicator to uncover its current performance. Previous studies have revealed passed carbon market efficiency; however, given the dynamics of the market, it is worthy to track the up-to-date status. This paper, specifically, studies the Hubei pilot carbon market, which is quite interesting, considering its market scale, as well as the COVID-19 pandemic context. Wild bootstrapping Variance Ratio test is implemented to detect the market efficiency with the most recent and abundant data. Results show that the market efficiency in the period of 2014-2020 is around 0.3951, less than 1, sug-gesting a weak form of efficiency. Observing the sub-sample periods, the efficiency shows to be quite volatile: it climbes from 0.3621 to 0.4027 and finally drops to 0.3985. Furthermore, the market efficiency soares after the COVID-19, which echoes the smooth local reopening thanks to supporting policies. To some extent, this study enlarged the analysis of COVID-19 impact on the industrial sector and for this reason it provides important reference for further research. The unique contribution of this paper is to provide the more updated evidence on the efficiency of China's pilot carbon market, as well as proofs of soaring market efficiency, after the pandemic.(c) 2021 Elsevier Ltd. All rights reserved.