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Race to Top or Race to Bottom Approach: Disaggregated Effect of Fiscal Decentralization and Its Implications for Consumption-Based Carbon Emissions

Author

Listed:
  • Muhammad Tufail

    (Xian Jiaotong University)

  • Lin Song

    (Xian Jiaotong University)

  • Weizheng Wang

    (Chinese Academy of Agricultural Sciences)

  • Xiao Gu

    (Communication University of Zhejiang)

  • Salahuddin Khan

    (King Saud University)

Abstract

Fiscal decentralization is a growing area of research, particularly for reducing carbon emissions and promoting environmental sustainability. However, its contribution to decreasing consumption-based carbon emissions remains relatively unexplored. Unlike previous studies, the current study explores the effect of expenditure and revenue decentralization on consumption-based carbon emission along with control variables such as exports, imports, human capital, globalization, renewable energy, and economic growth for BRICS economies from 1990 to 2020. The quantile regressions via method of moments test is employed to investigate the long-run relationship among the study variables. To enhance the robustness of the analysis this study also utilizes bootstrapped quantile regression and simple quantile regression tests. The results of quantile regressions via method of moments reveal that revenue decentralization increases consumption-based carbon emissions while expenditure decentralization reduces it. Moreover, it is worth noting that exports reduce while imports increases consumption-based carbon emissions in BRICS nations. Remarkably human capital, globalization, and renewable energy consumption have played pivotal roles in promoting environmental sustainability. However, the rapid pace of economic growth hurts the environment. This study holds substantial policy implications as it underscores the potential effectiveness of government measures aimed at improving environmental quality when these responsibilities are decentralized to the local population of the given state.

Suggested Citation

  • Muhammad Tufail & Lin Song & Weizheng Wang & Xiao Gu & Salahuddin Khan, 2024. "Race to Top or Race to Bottom Approach: Disaggregated Effect of Fiscal Decentralization and Its Implications for Consumption-Based Carbon Emissions," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(3), pages 15243-15277, September.
    • Handle: RePEc:spr:jknowl:v:15:y:2024:i:3:d:10.1007_s13132-023-01690-2
    DOI: 10.1007/s13132-023-01690-2
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    More about this item

    Keywords

    Expenditure decentralization; Revenue decentralization; Consumption-based carbon emissions; MMQR approach; BRICS economies;
    All these keywords.

    JEL classification:

    • H5 - Public Economics - - National Government Expenditures and Related Policies
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • F64 - International Economics - - Economic Impacts of Globalization - - - Environment

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