Re-examination Of Environmental Kuznets Curve Hypothesis

The economic society developed rapidly after the industrial revolution.Meanwhile,a large number of energy resources were consumed,which brought serious environmental problems.Environmental governance is an important issue that governments all over the world must face in the process of economic development.As the largest developing country,China was once faced with the dilemma of developing economy and protecting environment.The reform and opening up policy has been implemented for more than forty years.During this period,China’s economy has continued to develop rapidly.However,the extensive development mode of "high investment,high consumption and high pollution" has also made our country pay a heavy environmental price.In the face of this situation,the party and the government have made the strategic choices of ecological civilization construction and green development.They attach great importance to environmental protection.In order to find a better solution to the problems in the new period,it is very important to correctly grasp the relationship between economic growth and ecological environment.Therefore,the study of the long-term relationship between pollution and income based on different policy combinations is in line with the current development situation of our country.And it can provide a more reliable reference for the strategic formulation of environmental protection and resource utilization in the process of economic development.This paper try to analyze the comprehensive impact of the policy combination of environmental tax and the government pollution treatment on our country’s economy and environment.In order to solve this problem,this paper constructs a general equilibrium model with a microeconomic foundation.The model includes final product department,intermediate product department(cleaning department and pollution department),household department and government department.This paper implements policy combinations with different environmental tax rate and investment proportion of pollution treatment at first.Then the steady value of economic variables are solved and compared.Next,this paper simulates the dynamic paths of economic variables under heterogeneous policy combinations.The corresponding pollution-income curved are obtained and the policy combinations of forming environmental Kuznets curve can be identified.Finally,the robustness of the model is tested.The findings of this paper are as follows.Firstly,it is found that the settings of optimal policy combinations are different in goals of output maximization and utility maximization.When the goal is utility maximization,environmental quality is considered more and the tax rate is higher.Secondly,this paper implement different policy combinations,in which the final tax rate and investment proportion are the same.It is find that the steady value of economic variables under these policy combinations are equal such as output level and pollution stock.Thirdly,Dynamic policy combinations are the possible reasons for the formation of inverted-U-shaped pollution-income curve.When tax rate or investment proportion increases to a certain level,the curve is inverted-U-shaped.When their increase is relatively small,the formed curve accords with the environmental Kuznets curve hypothesis.When the degree of increase is greater,the inverted-U-shaped curve appears the phenomenon of back hook.This curve does not meet the strict environmental Kuznets curve hypothesis.Fourthly,it is found that the dual dynamic policy is the most favorable policy choice,it includes gradually increasing environmental tax rate and gradually decreasing investment proportion of pollution treatment.It can maintain a relatively high speed of economic development and high quality of environment in the process of economic development.And it can also obtain a relatively high level of utility in steady state.Finally,this paper tests the robustness of the model and finds that the above conclusions are robust.The main innovations of this paper include two aspects.Firstly,the environmental tax and the investment of pollution treatment are implemented as a policy combination.Secondly,the other aspect is to deal with the tax rate and the investment proportion dynamically in the course of implementation.This paper analyzes the possible formative causes of inverted-U-shaped pollution-income curve with back hook and environmental Kuznets curve from a new perspective.Based on the conclusions,this paper puts forward three policy suggestions from the following aspects.Firstly,we can implement the dual dynamic policy.It includes gradually increasing environmental tax rate and gradually decreasing investment proportion of pollution treatment.This policy can improve the level of social welfare and prompt the coordinated development of ecological civilization construction and economic construction.Secondly,we can implement policies,such as increasing the publicity of environmental protection and establishing the public participation mechanism.These works can improve residents’ awareness of environmental protection,reduce the cost of implementing environmental tax,and promote the efficiency of environmental governance.Thirdly,in order to improve the ability of environmental self-recovery,we can set up the system of environmental governance and strengthen the construction of ecological civilization...