The Effect of Low Carbon on Urban Economy: Romer Model and Empirical Evidence

Abstract

We investigate the relationship between carbon emissions and the economy, focusing on the environmental and economic conditions of cities in China. The research is conducted within the framework of low-carbon city pilot policies, aiming to determine whether city economies in China are growing, declining, or exhibiting a “U-shape” pattern under low-carbon circumstances. A sample of 29 cities, including municipalities and provincial capitals, was selected from the period between 2011 and 2016. Using regression analysis, we examine the negative correlation between GDP and carbon emissions and total industrial sulfur dioxide emissions. Additionally, we find a positive association between GDP and park green area. The robustness of our findings is confirmed through Budget Revenue tests. Furthermore, Difference-in-Differences (DID) testing reveals the positive impact of control variables on the two main variables under investigation.