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How Does Vertical Fiscal Imbalance Affect CO 2 Emissions? The Role of Capital Mismatch

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  • Tianchu Feng

    (School of Economics and Management, Zhejiang Agriculture and Forestry University, Hangzhou 311300, China
    Jiyang College, Zhejiang Agriculture and Forestry University, Zhuji 311800, China)

  • Meijuan Liu

    (School of Economics and Management, Zhejiang Agriculture and Forestry University, Hangzhou 311300, China)

  • Chaozhu Li

    (Jiyang College, Zhejiang Agriculture and Forestry University, Zhuji 311800, China)

Abstract

Climate warming caused by greenhouse gases is an important practical issue. This study aims to explore the impact of the vertical fiscal imbalance (VFI) on CO 2 emissions from the perspective of theoretical analysis and empirical research. This study uses panel data from 30 provinces in China from 2004 to 2018 in order to test this issue. The results show that the VFI has a significant positive impact on CO 2 emissions and that the capital misallocation exacerbates the positive impact of the VFI on CO 2 emissions. These study results also have a significant temporal heterogeneity. The sample results dating after 2008 were more significant. These conclusions provide economic and political references for local governments in order to develop CO 2 neutrality and CO 2 peaking policy goals and to promote an in-depth reform of the fiscal system.

Suggested Citation

  • Tianchu Feng & Meijuan Liu & Chaozhu Li, 2022. "How Does Vertical Fiscal Imbalance Affect CO 2 Emissions? The Role of Capital Mismatch," Sustainability, MDPI, vol. 14(17), pages 1-15, August.
    • Handle: RePEc:gam:jsusta:v:14:y:2022:i:17:p:10618-:d:897877
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