Empirical Study On The Relationship Between Environmental Pollution And Economic Growth Based On PVAR Model

Along with China's economic growth,the problems of resource shortages and environmental pollution have become increasingly prominent.The extensive development at the expense of over-exploitation of resources and sacrificing the environment over the past few decades has put pressure and constraints on sustainable economic growth.The report of the 19 th CPC National Congress pointed out that China's economy has shifted from high-speed growth to high-quality development,and is currently in the process of transforming development mode,optimizing economic structure,and transforming growth momentum.“Lucid waters and lush mountains are invaluable assets”,and achieving harmony between man and nature is the way to future economic development.It is of great practical significance to eliminate the outdated production capacity,save energy and reduce emissions,by which we can find a green development path that boosts the economy at the same time protects the environment.As the core of political and economic development,the population of municipalities and provincial capitals is highly concentrated,which causes severe environmental pollution problems and enormous environmental pressures.Therefore,China has set up key urban environmental monitoring stations in these cities to conduct Real-time monitoring on pollutants.In recent years,environmental issues have been drawing attention from scholars from varieties of fields.However,after reviewing relevant literatures,fact can be revealed that research on municipalities and provincial capitals is still relatively lacking.Therefore,this paper attempts to establish a panel vector autoregressive(PVAR)model to explore the relationship between environmental pollution and economic growth in China's municipalities and provincial capitals,and propose relevant countermeasures based on the empirical results obtained.Firstly,sort out related literatures at domestically and abroad from the perspectives of economic growth,environmental pollution and governance,and the relationship between the two of them,then summarizes related theories.Based on this,the research contents and research methods are proposed.Thenconduct the status analysis.Taking capita GDP as the measure of economic growth,then collect data on capita GDP of China's municipalities and provincial capitals from 2002 to 2016,and divide the target cities into high-income cities,middleincome cities,and low-income cities in order to explore the relationship of pollutions and economy growth in cities of different levels of economic development.From the perspectives of industrial pollution and domestic pollution,industrial wastewater discharge,industrial waste gas emissions,urban domestic sewage discharge,and urban life sulfur dioxide emissions are selected as environmental pollution indicators.Then analyze the status quo and observe the changing trend of economic growth and environmental pollution indicators.Followed by is empirical research.Panel Vector Autoregressive(PVAR)models are established in the three types of city between capita GDP and environmental pollution indicators.The relevant data were tested by panel cointegration test and then transformed through the Helmert method,and then select appropriate lag orders before the GMM estimates under the PVAR model,which is to explore the correlation saliency between the variables was investigated.Then,the impulse response and variance decomposition under 500 Monte-Carlo simulations were carried out to explore the mutual impact strength and contribution rate of each pollution indicators and economic growth.The empirical part draws the following conclusions:(1)The GMM estimates under the PVAR model show that environmental pollution indicators and per capita GDP are significantly correlated in both high-income and middle-income cities.In lowincome cities,estimates for industrial wastewater and urban life sulfur dioxide are not significant,indicating their relationship with economic growth may be subject to natural talent,industrial structure,policies or other factors outside the “economicpollution” autoregressive dynamic system.influences.(2)The impulse response under 500 Monte Carlo simulations shows that the industrial wastewater discharge and the urban sulfur dioxide emission in high-income cities both have a negative response to capita GDP,indicating that high-income cities have taken effective measurements on these two types of pollution.The capita GDP of middle-income cities has a negative response to urban life sulfur dioxide emissions,indicating that the consumption of sulfur dioxide in urban life will weaken the economic growth effect of middle-income cities,and even form constraints,and the problem of environmental bottlenecks begins to emerge.Except these pollutions mentioned above,all the indicators that show twoway significant have two-way positive response,indicating that economic growth and environmental pollution are mutually reinforcing.In general,there is no fundamental change with the extensive development mode in the municipalities and provincial capitals of China.In addition,the impact response intensity is expressed as middle-income cities > high-income cities > low-income cities,indicating that economic growth in middle-income cities is more dependent on extensive development and potential environmental pressures are greater.(3)The results of variance decomposition show that capita GDP and environmental pollution have the highest contribution rate to their own variance,which shows they are the strongest explanatory factor of their own change.The contribution rate of per capita GDP to environmental pollution is much greater than the contribution rate of environmental pollution to capita GDP,indicating that economic growth has a strong explanatory power for environmental quality changes,but the feedback of environmental pollution on economic growth is not obvious.Finally,combined with theoretical overview,current situation analysis and empirical results,the relevant countermeasures are proposed:(1)Transforming the development concept and optimizing the industrial structure.(2)Improve urban infrastructure construction and innovate urban policies.(3)Improve relevant laws and regulations.(4)Establish environmental audits and improve the emissions trading market.This can also form reference value and experience for the development of other cities and regions.