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Regulatory quality concerning carbon dioxide emissions in conjunction with the impact of fiscal decentralization.

Abstract:

BACKGROUND AND OBJECTIVES: Global carbon dioxide emissions have risen sharply in recent decades, sparking debate on the role of fiscal decentralization in environmental outcomes. Some argue that local autonomy fosters innovation and accountability, while others highlight risks of regulatory fragmentation and a “race to the bottom.” This study aimed to explore the relationship between fiscal decentralization and carbon dioxide emissions, particularly highlighting the frequently overlooked role of regulatory quality, which has often been disregarded in past studies. METHODS: A panel dataset of 73 countries (1990–2019) were analysed using indicators of fiscal decentralization (subnational expenditure, revenue, and vertical fiscal imbalance) from the International Monetary Fund’s fiscal federalism database. Carbon dioxide emissions were measured per capita and per unit of gross domestic product to …