Research On The Impact Of Fiscal Decentralization On Carbon Emissions

As the world’s greatest energy consumer and carbon dioxide emitter,China is under tremendous pressure to decrease emissions.The carbon reduction target would unavoidably bring about significant changes in the country’s economic and social development.The "Chinese miracle" of rapid economic growth was made possible by fiscal decentralization,an important institutional arrangement in the process of China’s economic development.However,it is also believed to have directly contributed to the failure of environmental governance.In light of this,the modification of the fiscal decentralization system may represent a significant advance in the promotion of carbon emission reduction.Fiscal decentralization is a type of institutional structure that has an indirect but significant impact on carbon emissions by changing how local governments behave.Fiscal decentralization still enables local governments to play to the advantage of information and simultaneously improve their capacity to manage carbon emissions under the assumption that economic growth and carbon emission reduction are compatible.On the other hand,under the combined effect of tax competition and political competition,fiscal decentralization tends to trigger excessive local attention to economic development,According to the theoretical research,it is unclear how fiscal decentralization will affect carbon emissions.This study establishes a theoretical analysis framework and uses local government behavior as a reasonable starting point to investigate how fiscal decentralization affects carbon emissions.This paper conducts an empirical analysis based on panel data of 293 Chinese cities from 2006 to 2019.The conclusion is as follows:(1)Fiscal decentralization will alter the decisions made by local governments,which will have an effect on carbon emissions;(2)Theoretically,a rise in fiscal decentralization can both assist local governments in better promoting carbon emission reduction and worsen carbon emissions;(3)There is significant heterogeneity in the impact of fiscal decentralization on carbon emissions,which is reflected in some variations in the degree of impact in different regions;(4)The effect of fiscal decentralization on carbon emissions is clearly heterogeneous,as seen by variations in the strength of the impact in various regions.Additionally,the negative impact of fiscal decentralization on the reduction of carbon emissions is more pronounced the higher the intensity of carbon emissions;(5)although the establishment of an environmental performance assessment system is theoretically conducive to the positive impact of fiscal decentralization on the reduction of carbon emissions,this mechanism has not yet been successfully implemented.This document also makes policy recommendations for improving the industrial structure,reforming the fiscal and taxing systems,and evaluating performance.