Fiscal decentralization and Pollution: Institutions Matter

Fiscal decentralization and Pollution: Institutions Matter

We estimate the impact of fiscal decentralization on different indicators of pollution for more than 80 countries from 1970 to 2000. Our cross country estimates show that fiscal decentralization increases pollution. However, higher quality of institutions can limit the destructive environmental effe...

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Bibliographic Details
Published in:MAGKS - Joint Discussion Paper Series in Economics (Band 22-2012)
Main Authors: Farzanegan, Mohammad Reza, Mennel, Tim,
Format: Work
Language:English
Published: Philipps-Universität Marburg 2012
Subjects:
pollution
environmental quality
Wirtschaft
institutions
decentralization
Economics
Online Access:PDF Full Text
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Summary:We estimate the impact of fiscal decentralization on different indicators of pollution for more than 80 countries from 1970 to 2000. Our cross country estimates show that fiscal decentralization increases pollution. However, higher quality of institutions can limit the destructive environmental effects of decentralization. The empirical results confirm a strand of the literature on decentralization that predicts a “race to the bottom” under federalism. The mitigating effect of good governance can be explained by relative preferences of local and central governments for environmental quality.
ISSN:1867-3678
DOI:10.17192/es2024.0136

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