Local government debt, resource misallocation, and green total factor productivity in China

Although China has implemented numerous environmental governance polices to realize green development, no significant changes have been achieved in reality. To understand the underlying reasons, we relate development debt-driven model by local government. Using total debt data of prefecture-level cities from 2007 2013, analyze effects expansion through a two-way fixed effect model. Results imply that government will inhibit factor productivity, but there are differences between long-term and short-term debts. Further analysis shows affect capital misallocation also finds an increase urban carbon emissions. This study recommends Chinese should further decrease size improve investment effectiveness achieve high-quality development.