Fiscal decentralization and environmental pollution: Evidence from Chinese panel data

Qichun He
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Qichun He: CEMA, Central University of Finance and Economics

No 776, CEMA Working Papers from China Economics and Management Academy, Central University of Finance and Economics

Abstract: China's environmental pollution casts a shadow on its economic success. Concerning fiscal decentralization, China introduced the rule-based tax assignment systemin 1994. To avoid the structural change in underlying fiscal regimes, we use the provincial panel data during the period 1995-2010. We find that fiscal decentralization has no significant effect on environmental pollution as it is measured per capita emission of wastewater, waste gas or solid waste in system GMM (Generalized method of moments) estimation. Our results are robust when we use different measures of fiscal decentralization. We further find that fiscal decentralization has a significant, positive effect on pollution abatement spending and pollutant discharge fees, which indicates possible mechanisms for fiscal decentralization to help protect the environment

Keywords: Fiscal decentralization; Environmental pollution; Pollution abatement spending; Pollutant discharge fees; Panel data (search for similar items in EconPapers)
JEL-codes: C23 H77 Q53 (search for similar items in EconPapers)
Pages: 15 pages
Date: 2025
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Journal Article: Fiscal decentralization and environmental pollution: Evidence from Chinese panel data (2015)
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