Study on the spatial interaction between carbon emission intensity and shadow economy in China

Abstract

Both high carbon emission intensity (CEI) and large scale of shadow economy in China are the undesirable products of economic development with too fast growth rate. For the rapid and healthy development of the economy in China, the research on the relationship between the two should attract more attention, while the relevant literatures are very few at present. According to the panel data of 30 provinces in China from 2004 to 2016, this paper firstly examines the spatial correlation between CEI and the scale of shadow economic. Then verifies the interaction relationship between them with SPDM (spatial panel Dubin Model). Moreover, the robustness test is conducted with three different spatial weight matrices. As the interaction between CEI and shadow economy has been proved, providing new ideas for carbon emission reduction, environmental protection, and healthy economic development with rapid rate in the future. The specific conclusions are as follows: first, CEI and shadow economy both have significant positive spatial autocorrelation. Second, there is a spatial interaction between CEI and shadow economy, indicating provincial cooperation plays a very important role in both economic growth and environment protection. Third, the impacts from economic development on both CEI and shadow economy satisfy the EKC hypothesis. Also, the development of the tertiary industry plays a positive role in promoting the growth of CEI, while promotes and inhibits the expansion of shadow economic scale at the same time.

Keywords: Carbon emission intensity; China; Shadow economy; Spatial interaction; Spatial panel Dubin model.