Role of financial decentralization on carbon taxation and carbon emission: Way forwards for economic recovery

The study intends to assess the role of financial decentralization on carbon taxation and carbon emission to recommend the way forwards for economic recovery. To estimate the nexus, study applied the cointegration analysis technique, CGE estimation model, long-run analysis using t-CGE model, and robustness analysis technique on Chinese data. Research findings declare that financial decentralization has significant role on extending the carbon taxation in China and financial decentralization supported 14.92% to expand carbon taxation throughout the Chinese industries. In such industries, pollution emission industries are the top of the list including transportation industry and other manufacturing companies. Overall, manufacturing industries size is about 78% and 11% size of transportation industry is included. Correspondingly, the findings also revealed that financial decentralization supports climate change mitigation with 29% and carbon taxation limits carbon emission with 44% in Chinese industries. Study directs to the stakeholders to enhance carbon taxation schemes in all sectors of the all the industries of China and come up with the viable policy action so that the desired sustainable development goals may achieve effectively. Hence, stakeholders need to consider recommendations of preceding research to enhance green economic recovery.