China’s fiscal decentralization and environmental quality: theory and an empirical study

Yu Hao; Yu-Fu Chen; Hua Liao; Yi-Ming Wei

doi:10.1017/S1355770X19000263

China’s fiscal decentralization and environmental quality: theory and an empirical study

Yu Hao (Lead / Corresponding author), Yu-Fu Chen, Hua Liao, Yi-Ming Wei

University of Dundee School of Business

Research output: Contribution to journal › Article › peer-review

71 Citations (Scopus)

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Abstract

As a wide-reaching institutional reform, China’s fiscal decentralization was launched in the early 1980s to encourage provincial economic growth by granting more financial autonomy to provincial governments. In this paper, the impact of fiscal decentralization on China’s environmental quality is investigated both theoretically and empirically. A neoclassical model is developed based on the primary characteristics of China’s fiscal decentralization. Using provincial panel data for the period 1995-2015, a two-equation regression model is employed to empirically verify the three propositions of the theoretical model: 1) there exists an inverted-U shaped relationship between fiscal decentralization and GDP per capita; 2) fiscal decentralization is positively related to GDP per capita at the steady state; 3) there is an inverted-U shaped Environmental Kuznets Curve relationship between pollution emissions and economic growth.

Original language	English
Pages (from-to)	159-181
Number of pages	23
Journal	Environment and Development Economics
Volume	25
Issue number	2
Early online date	2 Sept 2019
DOIs	https://doi.org/10.1017/S1355770X19000263
Publication status	Published - Apr 2020

Keywords

China
economic growth
environmental quality
fiscal decentralization
panel data

ASJC Scopus subject areas

Development
Environmental Science(all)
Economics and Econometrics

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

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10.1017/S1355770X19000263

Author Accepted Manuscript
This article has been published in a revised form in Environment and Development Economics [https://doi.org/10.1017/S1355770X19000263]. This version is free to view and download for private research and study only. Not for re-distribution, re-sale or use in derivative works. © Cambridge University Press 2019.
Accepted author manuscript, 146 KB

Cite this

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title = "China{\textquoteright}s fiscal decentralization and environmental quality: theory and an empirical study",

abstract = "As a wide-reaching institutional reform, China{\textquoteright}s fiscal decentralization was launched in the early 1980s to encourage provincial economic growth by granting more financial autonomy to provincial governments. In this paper, the impact of fiscal decentralization on China{\textquoteright}s environmental quality is investigated both theoretically and empirically. A neoclassical model is developed based on the primary characteristics of China{\textquoteright}s fiscal decentralization. Using provincial panel data for the period 1995-2015, a two-equation regression model is employed to empirically verify the three propositions of the theoretical model: 1) there exists an inverted-U shaped relationship between fiscal decentralization and GDP per capita; 2) fiscal decentralization is positively related to GDP per capita at the steady state; 3) there is an inverted-U shaped Environmental Kuznets Curve relationship between pollution emissions and economic growth.",

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note = "Funding Information: The authors acknowledge financial support from the National Natural Science Foundation of China (71761137001, 71403015, 71521002), the Beijing Natural Science Foundation (9162013), the key research program of Beijing Social Science Foundation (17JDYJA009), the National Key Research and Development Program of China (2016YFA0602801, 2016YFA0602603), and the Special Fund for Joint Development Program of the Beijing Municipal Commission of Education. The authors are also very grateful to two anonymous reviewers and Editor-in-Chief Prof. E. Somanathan for their insightful comments that helped us sufficiently improve the quality of this paper. The usual disclaimer applies. Publisher Copyright: {\textcopyright} 2019 Cambridge University Press. Copyright: Copyright 2020 Elsevier B.V., All rights reserved.",

year = "2020",

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doi = "10.1017/S1355770X19000263",

language = "English",

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N1 - Funding Information: The authors acknowledge financial support from the National Natural Science Foundation of China (71761137001, 71403015, 71521002), the Beijing Natural Science Foundation (9162013), the key research program of Beijing Social Science Foundation (17JDYJA009), the National Key Research and Development Program of China (2016YFA0602801, 2016YFA0602603), and the Special Fund for Joint Development Program of the Beijing Municipal Commission of Education. The authors are also very grateful to two anonymous reviewers and Editor-in-Chief Prof. E. Somanathan for their insightful comments that helped us sufficiently improve the quality of this paper. The usual disclaimer applies. Publisher Copyright: © 2019 Cambridge University Press. Copyright: Copyright 2020 Elsevier B.V., All rights reserved.

PY - 2020/4

Y1 - 2020/4

N2 - As a wide-reaching institutional reform, China’s fiscal decentralization was launched in the early 1980s to encourage provincial economic growth by granting more financial autonomy to provincial governments. In this paper, the impact of fiscal decentralization on China’s environmental quality is investigated both theoretically and empirically. A neoclassical model is developed based on the primary characteristics of China’s fiscal decentralization. Using provincial panel data for the period 1995-2015, a two-equation regression model is employed to empirically verify the three propositions of the theoretical model: 1) there exists an inverted-U shaped relationship between fiscal decentralization and GDP per capita; 2) fiscal decentralization is positively related to GDP per capita at the steady state; 3) there is an inverted-U shaped Environmental Kuznets Curve relationship between pollution emissions and economic growth.

AB - As a wide-reaching institutional reform, China’s fiscal decentralization was launched in the early 1980s to encourage provincial economic growth by granting more financial autonomy to provincial governments. In this paper, the impact of fiscal decentralization on China’s environmental quality is investigated both theoretically and empirically. A neoclassical model is developed based on the primary characteristics of China’s fiscal decentralization. Using provincial panel data for the period 1995-2015, a two-equation regression model is employed to empirically verify the three propositions of the theoretical model: 1) there exists an inverted-U shaped relationship between fiscal decentralization and GDP per capita; 2) fiscal decentralization is positively related to GDP per capita at the steady state; 3) there is an inverted-U shaped Environmental Kuznets Curve relationship between pollution emissions and economic growth.

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China’s fiscal decentralization and environmental quality: theory and an empirical study

Abstract

Keywords

ASJC Scopus subject areas

UN SDGs

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Erratum: China's fiscal decentralization and environmental quality: Theory and an empirical study (Environment and Development Economics (2020) 25 (159-181) DOI: 10.1017/S1355770X19000263)

Chen, Yu-Fu

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China’s fiscal decentralization and environmental quality: theory and an empirical study

Abstract

Keywords

ASJC Scopus subject areas

UN SDGs

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Research output

Erratum: China's fiscal decentralization and environmental quality: Theory and an empirical study (Environment and Development Economics (2020) 25 (159-181) DOI: 10.1017/S1355770X19000263)

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Chen, Yu-Fu

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