Does Air Pollution Impact Fiscal Sustainability? Evidence from Chinese Cities

Fiscal sustainability is an issue of great concern for governments globally and air pollution control has become an important factor affecting fiscal sustainability. This study aims to examine the impact of air pollution on fiscal sustainability in the short and long run. We conducted an empirical a...

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Autores principales:	Ge Gao, Xiuting Li, Xiaoting Liu, Jichang Dong
Formato:	article
Lenguaje:	EN
Publicado:	MDPI AG 2021
Materias:	fiscal sustainability public finance sustainability air pollution sustainable development Technology T
Acceso en línea:	https://doaj.org/article/cadfa70d141e4384bc13e22c06d62a7c
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spelling	oai:doaj.org-article:cadfa70d141e4384bc13e22c06d62a7c2021-11-11T16:00:26ZDoes Air Pollution Impact Fiscal Sustainability? Evidence from Chinese Cities10.3390/en142172471996-1073https://doaj.org/article/cadfa70d141e4384bc13e22c06d62a7c2021-11-01T00:00:00Zhttps://www.mdpi.com/1996-1073/14/21/7247https://doaj.org/toc/1996-1073Fiscal sustainability is an issue of great concern for governments globally and air pollution control has become an important factor affecting fiscal sustainability. This study aims to examine the impact of air pollution on fiscal sustainability in the short and long run. We conducted an empirical analysis based on air pollution and local government debt data on China’s prefecture-level cities in 2014–2019, using regression discontinuity design (RDD) and a panel data model. The results show that air pollution reduces the debt burden of governments in the short run. However, in the long run, addressing the negative impacts of air pollution adds to the debt burden of local governments, hindering fiscal sustainability. Fiscal freedom and the level of public services significantly moderate the negative impact of air pollution on fiscal sustainability. A higher level of fiscal freedom generally indicates a greater incentive for local governments to raise pollutant emission standards, strengthen the construction of green infrastructure, and subsidize green enterprises. Furthermore, a higher level of public services reflects better infrastructure and higher levels of investment in environmental protection, which help to reduce the negative impact of air pollution. The governments are suggested to take measures to effectively control air pollution, so as to enhance fiscal stability in the long run.Ge GaoXiuting LiXiaoting LiuJichang DongMDPI AGarticlefiscal sustainabilitypublic finance sustainabilityair pollutionsustainable developmentTechnologyTENEnergies, Vol 14, Iss 7247, p 7247 (2021)
institution	DOAJ
collection	DOAJ
language	EN
topic	fiscal sustainability public finance sustainability air pollution sustainable development Technology T
spellingShingle	fiscal sustainability public finance sustainability air pollution sustainable development Technology T Ge Gao Xiuting Li Xiaoting Liu Jichang Dong Does Air Pollution Impact Fiscal Sustainability? Evidence from Chinese Cities
description	Fiscal sustainability is an issue of great concern for governments globally and air pollution control has become an important factor affecting fiscal sustainability. This study aims to examine the impact of air pollution on fiscal sustainability in the short and long run. We conducted an empirical analysis based on air pollution and local government debt data on China’s prefecture-level cities in 2014–2019, using regression discontinuity design (RDD) and a panel data model. The results show that air pollution reduces the debt burden of governments in the short run. However, in the long run, addressing the negative impacts of air pollution adds to the debt burden of local governments, hindering fiscal sustainability. Fiscal freedom and the level of public services significantly moderate the negative impact of air pollution on fiscal sustainability. A higher level of fiscal freedom generally indicates a greater incentive for local governments to raise pollutant emission standards, strengthen the construction of green infrastructure, and subsidize green enterprises. Furthermore, a higher level of public services reflects better infrastructure and higher levels of investment in environmental protection, which help to reduce the negative impact of air pollution. The governments are suggested to take measures to effectively control air pollution, so as to enhance fiscal stability in the long run.
format	article
author	Ge Gao Xiuting Li Xiaoting Liu Jichang Dong
author_facet	Ge Gao Xiuting Li Xiaoting Liu Jichang Dong
author_sort	Ge Gao
title	Does Air Pollution Impact Fiscal Sustainability? Evidence from Chinese Cities
title_short	Does Air Pollution Impact Fiscal Sustainability? Evidence from Chinese Cities
title_full	Does Air Pollution Impact Fiscal Sustainability? Evidence from Chinese Cities
title_fullStr	Does Air Pollution Impact Fiscal Sustainability? Evidence from Chinese Cities
title_full_unstemmed	Does Air Pollution Impact Fiscal Sustainability? Evidence from Chinese Cities
title_sort	does air pollution impact fiscal sustainability? evidence from chinese cities
publisher	MDPI AG
publishDate	2021
url	https://doaj.org/article/cadfa70d141e4384bc13e22c06d62a7c
work_keys_str_mv	AT gegao doesairpollutionimpactfiscalsustainabilityevidencefromchinesecities AT xiutingli doesairpollutionimpactfiscalsustainabilityevidencefromchinesecities AT xiaotingliu doesairpollutionimpactfiscalsustainabilityevidencefromchinesecities AT jichangdong doesairpollutionimpactfiscalsustainabilityevidencefromchinesecities
_version_	1718432440111857664

Does Air Pollution Impact Fiscal Sustainability? Evidence from Chinese Cities

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