Economic Uncertainty and Green Economic Efficiency: Evidence From China

ABSTRACT This paper constructs city‐level economic uncertainty indicators based on expected economic growth targets in China and combines them with panel data from 270 cities spanning 2006 to 2022 to examine the impact of economic uncertainty on green economic efficiency. The empirical results reveal that increasing economic uncertainty significantly hampers green economic efficiency. Mechanism analysis indicates that economic uncertainty weakens industrial agglomeration and impedes urban green innovation, thereby exerting a negative effect on green economic efficiency. This adverse impact is particularly pronounced in cities located in the central and eastern regions, non‐environmentally focused cities, and cities with low levels of human capital, fiscal decentralization, and digital economy development. Furthermore, economic uncertainty exhibits significant spatial spillover effects: rising uncertainty in one region can enhance green economic efficiency in neighboring cities. This study offers empirical evidence on the environmental consequences of economic uncertainty at the city level and provides valuable policy insights.