Research On Transmission Mechanism Of Environmental Regulation To Economic Growth

Benefited from the extensive mode of development, China’s economy has experienced an "explosive growth" stage in the past30years, which however is at the heavy cost of environmental destruction. China is currently facing the double challenge from the environment and economy, in order to coordinate the environmental quality and economic growth, the government must propose appropriate environmental policies. The key point of policy-making is to identify the transmission mechanism of environmental regulation. However, most of the researches emphasize the result of regulation, only a few of them discuss the transmission mechanism. Therefore, a research on the transmission mechanism of environmental regulation to economic growth has great theoretical and practical significance.This paper provides a basic framework for the analysis of environmental quality and economic growth from the perspective of household, environment and economy. Based on this framework, this paper uses mathematical models to describe the mechanism of environmental regulation in promoting economic growth through different transmission paths (education, R&D and savings decision). Then, with the help of Eviews6.0, this paper conducts an empirical test from the perspective of different regions and different regulation styles to verify the existence and effectiveness of the transmission mechanism by using granger causality test and multiple linear regression method respectively, based on the panel data of30provinces (cities, autonomous regions) of China from2004to2010.The results show that:both from the perspective of different regions and regulation styles, the existence and effectiveness of the transmission mechanism is verified. What’s more, the transmission mechanism presents diversity among different regions and regulation styles: in the eastern region, the transmission mechanism has been completely established and is effective. In the central region, the transmission mechanism is only partly built and not effective. In the western region, the transmission mechanism hasn’t been established and the economy doesn’t benefit from it. The transmission mechanism of expenditure-style regulation has been partially established, but it’s not effective. The transmission mechanism of investment-style regulation has been fully built and is effective.