 Economic policy uncertainty and industrial pollution: The role of environmental supervision by local governmentsQiang Wen and Teng Zhang China Economic Review, 2022, vol. 71, issue C Abstract: This paper explores the effect of economic policy uncertainty (EPU) on industrial pollution using China's real-time pollution data and a novel news-based EPU index constructed by Davis, Liu, and Sheng (2019). Empirical results suggest that EPU can significantly promote sulfur dioxide (SO2) readings in cities experiencing higher ex-ante fiscal pressure, and this effect is more profound during the daytime. Given that SO2 is the main contributor to industrial pollution, and local governments have less incentive to monitor illegal pollutant discharges during the nighttime period, our findings indicate that rising EPU will harm the environment by motivating local authorities to reduce environmental supervision and thus increase industrial pollution. We also find that promoting regional innovation and strengthening external environmental regulations can mitigate the pollution effect of economic policy uncertainty. Keywords: Economic policy uncertainty; Air pollution; Fiscal pressure; Environmental supervision; Regional innovation (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:chieco:v:71:y:2022:i:c:s1043951x21001413 DOI: 10.1016/j.chieco.2021.101723 Access Statistics for this article China Economic Review is currently edited by B.M. Fleisher, K. X. D. Huang, M.E. Lovely, Y. Wen, X. Zhang and X. Zhu More articles in China Economic Review from Elsevier |
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