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Fiscal Decentralization, Economic Growth, and Haze Pollution Decoupling Effects: A Simple Model and Evidence from China

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Abstract

This study uses the Hamilton function method to explore the dynamic relationships among fiscal decentralization, economic growth, and environmental pollution decoupling under the framework of endogenous growth theory. Furthermore, the study uses a partial derivative method, the results of which reveal that fiscal decentralization and haze pollution decoupling display an inverse U-shaped relationship and that the economic growth rate has a negative effect on haze pollution decoupling. This study uses the panel data of 30 provinces and municipalities of China to perform an empirical investigation. Our findings demonstrate empirical results, which verify the correctness of the theoretical results. This study also uses the threshold regression method to conduct a grouping experimental research and compares the regression results of each group. Our findings demonstrate the degrees of fiscal decentralization and the years that correspond to their turning points have differences. Finally, policies and recommendations are proposed.

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Notes

  1. Haze weather is a state of air pollution, and haze is a general description of excessive amounts of various suspended solids in the atmosphere. Especially \(\hbox {PM}_{2.5}\) (particulate matter of 2.5 micrograms or less) may be responsible for furring up haze weather, and can enter the human blood stream through the lungs, increasing the likelihood of diseases.

  2. Inter-departmental and inter-regional mechanisms for joint prevention and control work are founded upon their administrative agreement, and no administrative affiliations between agents exist because of the different pace caused by different priorities and development modes of various regions of China. Moreover, unbalanced regional development, imperfect compensation and promotion mechanism, and lack of follow-up security of joint prevention and control result in it is unable to form the long-effect mechanism. In this case, the phenomenon of free riding of each individual region occurs. These regions enjoy the external positive effect of haze pollution control while passing on pollution costs to their neighborhoods, impairing air quality in the entire region.

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Acknowledgements

Finally, the authors notably appreciate the National Natural and Science Foundation of China (71573240) and the Doctoral Foundation of the Ministry of Education of China (20133402110040) for supporting this study.

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Authors and Affiliations

  1. School of Management, University of Science and Technology of China, Hefei, 230026, Anhui, People’s Republic of China

    Liangliang Liu, Donghong Ding & Jun He

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  1. Liangliang Liu
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Correspondence to Jun He.

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Liu, L., Ding, D. & He, J. Fiscal Decentralization, Economic Growth, and Haze Pollution Decoupling Effects: A Simple Model and Evidence from China. Comput Econ 54, 1423–1441 (2019). https://doi.org/10.1007/s10614-017-9700-x

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