Author(s)

Yonghao Guan ¹, Wenjie He ², Huan Ke ¹, Jiahui Xie ¹

Affiliation(s)

¹ School of Public Finance and Taxation, Nanjing University of Finance and Economics, Nanjing, 210023, China
² School of Accounting, Nanjing University of Finance and Economics, Nanjing, 210023, China

Corresponding Author

Jiahui Xie

ABSTRACT

After the 1994 tax-sharing reform, the central government in China used inter-governmental fiscal transfers (IFTs) to improve local governments’ fiscal imbalance and to regulate local economic development. Based on China’s provincial panel date from 1998 to 2019, we examine the impact of IFTs on energy consumption. The results show that IFTs exert a significant positive effect on energy consumption, a one percentage increase in the IFTs leads to 12.4 percentage increase in energy consumption. Meanwhile, the Mediating Effect model show that IFTs leads to Education Expenditures (EDUEs) expand, which significantly increase energy consumption with the mediating effect 32.59%. Besides, IFTs leads to Pat reduce, which significantly decrease energy consumption with the suppression effect. This indicates that IFTs not only increase energy consumption through education expenditures, but also suppress the science and technology innovation, resulting in a decrease in the positive effect on energy consumption. From the perspective of policy recommendations, this study suggests that the Chinese central government should de-sign a more reasonable distribution model, establish a systematic assessment system that includes green GDP for government officials, and improve the structure of expenditure on education, which help realizing the purpose of decreasing energy consumption.

KEYWORDS

Intergovernmental fiscal transfers, energy consumption, education expenditures

CITE THIS PAPER

Yonghao Guan, Wenjie He, Huan Ke, Jiahui Xie, Effect of Intergovernmental Fiscal Transfers on Energy Consumption in China. Financial Engineering and Risk Management (2024) Vol. 7: 92-99. DOI: http://dx.doi.org/10.23977/ferm.2024.070312.

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