A Study On The Economic Effects Of Intergovernmental Fiscal Competition

In China, the central government kept the hope that the impact of its policies and guide the behavior of local governments, so as to demonstrate its strong influence and control. The local governments want their behavior to be ever-present special policies the central government's support and incentives, hoping to display the local government, especially local government officials a "performance." As a result, the central government and local governments in their policy space, using a variety of policy tools available to carry out an overt or covert, form a variety of game. Interestingly, the game results are often the central government "grand launch of policy on the impact of declining local government behavior, and those who seem weak local governments and their various rational or irrational behavior has a profound impact on the central government The Government's policy prescription or even change the frequency.A realistic explanation is that local government will take full advantage of their own "agent resources" to bargain with the central government,which tempts it to make institutional arrangements to their advantage; or to meet their own interests within the limits of understanding and implementing the system of higher level rules, the formation of withholding, distorting rules, "innovative" behavior, once these local actions eventually led to a national "problem", impact on the policy of the central government authority to compel the central government has frequently introduced new policies or re-interpretation of the policy, and each time " rectification "and" macro-control, "just a few. Therefore, the study of the behavior of local governments, or even more than to look at the reality of the central government's policy and forward-looking.Said strictly that between our country same level Local authority competes begins in the decentralization (administrative to release authority after efficient decentralization) and the market economy system reform direction establishment. In planned economy time, Central authorities highly centralization, although the regional governments struggle the application central investment plan and the financial transfer payment, although also has between the Local authority the crosswise competition seed, but the final decision-making power controls completely in the Central authorities hand, because the Local authority does not have the decentralization also not to have the competitor. On the contrary, the planned economy time, has the serious longitudinal government competition but actually.From the dynamic point of view, the conduct of local government has the nature of diminishing marginal returns. Those who take the lead in "marginal" behavior of the local governments tend to ge over the political rents and economic benefits. Especially those with "innovation", "Pilot" and "reform" in the name of local government behavior even more so. These good returns is bound to induce the other at the same level comparisons between local governments and to follow. The imitation process becomes stronger, higher and higher levels, means more and more diversified, more and more complicated and confusing effect, we end up converted into ", both in East and West, " a nationwide open competition between governments at the same level.In theory, the standardization of local governments compete to produce the following consequences: First, objectively speaking, is conducive to the effective supply of public goods. Second, provided the impetus for institutional innovation and the environment. However, China's special governance structure can easily be turned into a negative sum game (mainly reflected the increase in transaction costs and resource allocation distortions), such competition to enlarge and strengthen the local government and even distort the economic behavior of some of the variation. In particular, the number is expanding as the core performance standards is to further strengthen the degree of alienation of local government behavior.Competitive government is bound to birth competitive finance. Because the competitive behavior of local governments must be found in the local financial revenue and expenditure being. In essence, the local government fiscal competition between local governments at all levels in order to attract more inflow of scarce economic resources or the quality of this area and competing supply a better mix of local public goods and taxes, with a view to the main directly or indirectly, investments in resources or consumer behavior in this area is conducive to the interests of decision-making. Can be seen that the scarcity of resources and financial self-interest motives are inter-governmental fiscal competition, the direct cause.From the formal point of view, fiscal competition between local governments to tax competition is bound to go through to the main competition of financial expenditure-based development process. In particular, with the tax system, improve and standardize the local government within the system or a system through various preferential tax policies to outside access to economic resources of space getting smaller and smaller. Local governments also gained from turning the supply of quality local public goods spending competition and accompanied by fiscal decentralization system and the increasingly standardized, high quality of local public goods and public services expenditure as the main features of competition will gradually become the Government the principal means of competition among financial.If we say that inter-governmental fiscal expenditure competition is indeed a specific system in the context of a specific financial actions. So, the financial expenditure to compete effectively depends largely on whether or not the system of scientific and normative acts. So, in our country's current political and economic conditions, local competitive behavior between the expenditure will have what effect? These effects will be of the mode of transmission and spread? Is not optimistic that China's current expenditure is facing competition in imperfect institutional environment, government finance act does not regulate the dual characteristics of both with each other birth and promote each other, seriously affecting the economic and social sustainable development. How to rationalize the competitive environment, regulate competitive behavior? This is the logical starting point of this study and practical significance lies.This study attempts to address the following questions:1, as a government action, the existence of competition in the financial expenditure? If there is, how to test and decide? 2, the Intergovernmental expenditure competition in many ways, at different stages of development of these means of competition status changes? Combination of these diverse means of how the effects of change? 3, competition is a source of efficiency, fiscal expenditures whether competition will help improve the performance of China's local governments to run? What if can improve the way? 4, since the financial expenditure competition is common, with the objective economic and social conditions around the differences in greater economic development around the effects of competition on the overall impact on how a systematic analysis? 5, how healthy and orderly competition in intergovernmental fiscal spending to induce transformation of the government to realize the public nature of return?This paper argues that inter-governmental economic effects of fiscal spending to compete in the competitive behavior is essentially a financial system in a given environment, the consequences of the behavior. Based on this, this article accompanied by "the institutional environment-competitive behavior-transmission mechanisms-behavioral effects, " the idea of a study: first, in the context of the established system, constructed expenditure framework for theoretical analysis of competition. Analysis of competition in the financial expenditure the origin, form, type, effect of transmission mechanism. Subsequently, this article the theoretical framework of the above-mentioned local governments in China under the existence of competition between the financial expenditure of empirical testing, from the macro inter-governmental fiscal spending my grasp the characteristics and extent of competition. After you verify the existence of China's fiscal expenditure competition among local governments, this paper based on the original definition of the financial expenditure of competition, followed by analysis of competition in inter-governmental fiscal spending on infrastructure, capital flows, labor mobility, regional economic disparities, the level of basic public services, the impact of. Finally, in the former text of the study based on the number of recommendations.Specifically, the text is divided into nine chapters, logically, mainly around the relationship between cause and effect, or side by side. Chapter I Introduction. Carried out to define the main concepts and literature review, forming the framework of this research and the research tasks. Chapter II as the full text of the theoretical framework, its efficacy, such as "Man eyes" shrouded text. This section analyzes the financial expenditure of competition among local governments, the theoretical basis spread mechanism, determine the principles. Chapter III of the study for the full text of the originator, using a variety of measurement methods among local governments in China confirmed the existence of competition in financial expenditure for the study later in providing a realistic background. Chapter IV based on the perspective of convergence and differences in research expenditures among local governments to compete for infrastructure spatial distribution. The fifth, sixth chapter the use of panel data analysis of the local result of competition between the expenditure of capital and labor mobility in the pattern of inter-regional differences. This is the full text of the important and difficult, but also the core and innovative point of this article lies. Chapter VII of the inter-local government expenditures from the perspective of competition to explain the level of China's regional economic development gap. Chapter VIII examines the financial expenditure competition among local governments in China whether the "Tiebout effect", an analysis of its equalization of basic public services, the impact of the process. Chapter IX for the full text of the conclusion, on the basis of summing up the full text put forward policy recommendations.Throughout text, according to "original" of this standard, the main innovations in this paper the performance of the following three aspects:one, to compete inter-governmental fiscal expenditure are classified.2, for our government the existence of competition between the financial expenditure has been tested.3, a comprehensive analysis of China's intergovernmental fiscal expenditure on the economic effects of competition.