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The nexus of fiscal policy instruments and environmental degradation in China

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Abstract

As one of the world’s largest economies, Chinese economy is maintaining the rapid economic development along with the cost of environmental degradation. The role of fiscal policy instruments is still unknown in the Chinese pollution equation. To do this, the present study is an effort to quantify the nexus of fiscal policy instruments and environmental degradation for Chinese economy over 1980 to 2016. The results reveal that fiscal policy instruments significantly increase the environmental degradation in the long run. The GDP and energy consumption of Chinese economy also enhance the environmental degradation respectively. The innovative accounting approach and diagnostics tests also applied to confirm the empirical estimates of study are reliable and valid for policy implications. The outcomes of study reveal that expansionary fiscal policy will lead to environmental degradation. Therefore, the Chinese authorities may consider the usage of advance and eco-friendly production methods to sustain the fast-growing economic growth along with the healthier environment.

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Authors and Affiliations

  1. Shanxi University of Finance and Economics, Taiyuan, Shanxi, China

    Peng Yuelan & Muhammad Waqas Akbar

  2. School of Economics and Management, Beijing University of Posts and Telecommunications, No 10, Xitucheng Road, Beijing, People’s Republic of China

    Muhammad Hafeez

  3. The Center of Industrial Economics and Green Development, BUPT, Beijing, People’s Republic of China

    Muhammad Hafeez

  4. College of Computer Science and Technology, Qingdao University, Qingdao, 266071, China

    Manzoor Ahmad

  5. School of Economics, Quaid-i-Azam University, Islamabad, Pakistan

    Zeenat Zia & Sana Ullah

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  1. Peng Yuelan
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  2. Muhammad Waqas Akbar
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  3. Muhammad Hafeez
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  4. Manzoor Ahmad
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  5. Zeenat Zia
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  6. Sana Ullah
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Correspondence to Muhammad Hafeez.

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Yuelan, P., Akbar, M.W., Hafeez, M. et al. The nexus of fiscal policy instruments and environmental degradation in China. Environ Sci Pollut Res 26, 28919–28932 (2019). https://doi.org/10.1007/s11356-019-06071-4

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  • DOI: https://doi.org/10.1007/s11356-019-06071-4

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