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Has Fiscal Decentralization Promoted or Restricted Public Environmental Expenditure? An Empirical Analysis Based on China's Provincial Panel Data

XIN Chong-chong;ZHOU Quan-lin;Zhongnan University of Economics and Law;Jiangxi University of Finance and Economics;  
Public environmental expenditure is an important means to achieve ecological protection and environmental governance, while the fiscal decentralization system is a key factor affecting the preferences of government expenditures. In order to further identify whether fiscal decentralization has negative incentive towards the public environment governance of local governments, this paper makes use of China's provincial panel data from 2007 to 2015 to explore the impact of China's fiscal decentralization on public environment expenditures from the two dimensions of income decentralization and expenditure decentralization. The results show that both fiscal decentralization and expenditure decentralization are significantly and negatively correlated to public environmental expenditures, which verifies that the current fiscal decentralization system has some problems in the public environmental governance of local governments, such as distorted stimulations, insufficient restrictions, and so on.Therefore, in order to promote the green development and build a beautiful China, it is necessary to improve the institutional environment, the relationship between the central and local governments, the transfer payment system, the regional cooperative governance model and the environmental protection concept.
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