The intermediary and threshold effect of green innovation in the impact of environmental regulation on economic Growth: Evidence from China

Behind the rapid economic growth, the problems of environmental pollution have gradually become prominent. Environmental regulation is an important means for the government to deal with environmental problems in economic development and promote the construction of ecological civilization. Using the provincial data of China from 2005 to 2020, this paper studies the intermediary effect and threshold effect of green innovation in the process of environmental regulation affecting economic growth. The stepwise regression model of intermediary effect shows that environmental regulation promotes green innovation significantly, which further promotes economic growth. The panel threshold regression model shows that when green innovation is below 7.984 (the second threshold), environmental regulation positively affects economic growth, and when green innovation exceeds the second threshold, their marginal effects weaken. Further research shows that there is the regional specific heterogeneity effect. This paper analysis from 4 regions of China. When green innovation exceeds a certain threshold (eastern threshold is 4.382, central threshold is 6.553, western threshold is 5.037, northeastern threshold is 5.347), it decreases the marginal impact effect each region. The research results can provide reference for the government to formulate reasonable policies to balance environment and economy.