HAS ENVIRONMENTAL REGULATION RESTRAINED SMOG POLLUTION: EVIDENCE FROM CHINA

Shoufeng Huang and Dengta Chen ()
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Shoufeng Huang: Department of Public Economics, School of Economics, Xiamen University, Xiamen 361005, China†Division of Economics, Nanyang Technological University, 50 Nanyang Ave, 639798, Singapore‡School of Economics and Management, Wuhan Polytechnic University, Wuhan 430023, China
Dengta Chen: #xA7;The Wang Yanan Institute for Studies in Economics, Xiamen University, Xiamen 361005, China

The Singapore Economic Review (SER), 2020, vol. 65, issue 03, 555-575

Abstract: We studied how environmental regulation affects the ecological environment from the perspective of an underground economy. The theoretical model shows that environmental regulation exerts both direct and indirect effects — via the underground economy — on environmental pollution, and that the underground economy is unfavorable for the environment. Empirical results show that all the effects (direct, indirect, and total) of environmental regulation are insignificant, and the enforcement of environmental regulation may increase smog emissions with the expansion of the underground economy; smog pollution will increase with the strengthening of environmental regulation. Moreover, the underground economy shows a remarkable spatial effect when using spatial distance or spatial economics weights matrix.

Keywords: Environmental regulation; underground economy; smog pollution; spatial durbin model (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1142/S0217590817410053

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