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Corruption, Hidden Economy and Environmental Pollution: A Spatial Econometric Analysis Based on China’s Provincial Panel Data

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  • Shi Wang

    (School of Economics and Finance, Xi’an International Studies University, Xi’an 710128, China
    Institute of International Public Opinion and International Communication, Xi’an International Studies University, Xi’an 710128, China
    “One Belt One Road” Economic and Trade Cooperation Innovation Team, Xi’an International Studies University, Xi’an 710128, China)

  • Yizhou Yuan

    (School of Economics and Finance, Xi’an International Studies University, Xi’an 710128, China)

  • Hua Wang

    (School of Foreign Studies, Xi’an Jiaotong University, Xi’an 710049, China)

Abstract

Previous studies show that the environmental quality is significantly influenced by corruption and the hidden economy separately. However, what is the impact of their interaction effect on environmental quality? Based on Multiple Indicators Multiple Causes (MIMIC) model, this study calculates the scale of hidden economy in Chinese provinces firstly. Then, we apply the method of spatial econometrics to analyze the interaction effect of corruption and the hidden economy on environmental pollution with China’s provincial panel data from 1998 to 2017. The results indicate that the interaction effect between corruption and hidden economy significantly increases pollutant discharge, suggesting that both anti-corruption and control of the hidden economy may improve environmental quality directly and indirectly.

Suggested Citation

  • Shi Wang & Yizhou Yuan & Hua Wang, 2019. "Corruption, Hidden Economy and Environmental Pollution: A Spatial Econometric Analysis Based on China’s Provincial Panel Data," IJERPH, MDPI, vol. 16(16), pages 1-23, August.
    • Handle: RePEc:gam:jijerp:v:16:y:2019:i:16:p:2871-:d:256707
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