Environmental pollution and fiscal decentralization. On the role of institutions.
(2018) NEKP01 20181Department of Economics
- Abstract
- Previous research in the field of Environmental Federalism has not reached an agreement on whether fiscal decentralization leads to an increase in environmental pollution, i.e. a race to the bottom, or decrease in it, i.e. a a race to the top. Farzanegan and Mennel (2012) point out that this discrepancy may be due to institutions. Employing the OLS estimator, they find that fiscal decentralization leads to a race to the bottom which is mitigated by the quality of institutions in both transboundary and local pollutants. In this paper, the GMM estimator is employed to account for endogeneity issues arising from fiscal decentralization and the quality of institutions. Contrarily to what it was previously found, it is shown in this empirical... (More)
- Previous research in the field of Environmental Federalism has not reached an agreement on whether fiscal decentralization leads to an increase in environmental pollution, i.e. a race to the bottom, or decrease in it, i.e. a a race to the top. Farzanegan and Mennel (2012) point out that this discrepancy may be due to institutions. Employing the OLS estimator, they find that fiscal decentralization leads to a race to the bottom which is mitigated by the quality of institutions in both transboundary and local pollutants. In this paper, the GMM estimator is employed to account for endogeneity issues arising from fiscal decentralization and the quality of institutions. Contrarily to what it was previously found, it is shown in this empirical investigation that (1) the effect that fiscal decentralization exerts on pollution depends on the quality of institutions; and (2) fiscal decentralization leads to decreased environmental degradation when countries display high-quality institutions, and thus we find a race-to-the-top, whereas for low-quality institutions the opposite is true. These results hold for transboundary pollutants, but not for local pollutants. (Less)
Please use this url to cite or link to this publication:
http://lup.lub.lu.se/student-papers/record/8945500
- author
- Romero Molina, Alfred LU
- supervisor
-
- Åsa Hansson LU
- organization
- course
- NEKP01 20181
- year
- 2018
- type
- H2 - Master's Degree (Two Years)
- subject
- keywords
- Environmental pollution, fiscal decentralization, institutions, race to the top, race to the bottom, GMM estimator.
- language
- English
- id
- 8945500
- date added to LUP
- 2018-07-03 13:36:32
- date last changed
- 2018-07-03 13:36:32
@misc{8945500, abstract = {{Previous research in the field of Environmental Federalism has not reached an agreement on whether fiscal decentralization leads to an increase in environmental pollution, i.e. a race to the bottom, or decrease in it, i.e. a a race to the top. Farzanegan and Mennel (2012) point out that this discrepancy may be due to institutions. Employing the OLS estimator, they find that fiscal decentralization leads to a race to the bottom which is mitigated by the quality of institutions in both transboundary and local pollutants. In this paper, the GMM estimator is employed to account for endogeneity issues arising from fiscal decentralization and the quality of institutions. Contrarily to what it was previously found, it is shown in this empirical investigation that (1) the effect that fiscal decentralization exerts on pollution depends on the quality of institutions; and (2) fiscal decentralization leads to decreased environmental degradation when countries display high-quality institutions, and thus we find a race-to-the-top, whereas for low-quality institutions the opposite is true. These results hold for transboundary pollutants, but not for local pollutants.}}, author = {{Romero Molina, Alfred}}, language = {{eng}}, note = {{Student Paper}}, title = {{Environmental pollution and fiscal decentralization. On the role of institutions.}}, year = {{2018}}, }