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

Research output: Contribution to journalArticle

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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 languageEnglish
Number of pages23
JournalEnvironment and Development Economics
Early online date2 Sep 2019
DOIs
Publication statusE-pub ahead of print - 2 Sep 2019

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Fiscal decentralization
Environmental quality
Empirical study
China
GDP per capita
Economic growth
Inverted-U
Autonomy
Institutional reform
Environmental Kuznets curve
Pollution
Government
Regression model
Panel data
Neoclassical model

Keywords

  • China
  • economic growth
  • environmental quality
  • fiscal decentralization
  • panel data

Cite this

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China’s fiscal decentralization and environmental quality : theory and an empirical study. / Hao, Yu (Lead / Corresponding author); Chen, Yu-Fu; Liao, Hua; Wei, Yi-Ming.

In: Environment and Development Economics, 02.09.2019.

Research output: Contribution to journalArticle

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