Research On Local Debt Risk In China Based On Fiscal Sustainable Perspective

After the global financial crisis,China has implemented a proactive fiscal policy to cope with the complicated economic situation at home and abroad.Under the new normal economy,fiscal policy continued with its power push,however,the decline in revenue growth and growing spending rigid problem make the local government affordable repay funds affected widely,resulting in local government debt scale and risk index rising,while the debt risk of problems thus caused become the focus of the government and the educational world attention.This paper orients on the local government debt risk in China as the research object and follows the theory of financial sustainable theory,debt risk and risk management as the research basis to discuss the new normal fiscal sustainability in our country,the impact on the debt risk of local government and the new mechanism of action.First of all,from the point of overall risks,the rapid expansion of the early stage of the local government debt in our country makes the debt risks rise year by year,However,as the new "budget law" since then,the local government debt management policy and steadily push forward debt management while debt risk of local government showed signs of stabilizing.From the analysis of the spatial pattern of debt,the spatial spillovers and contagion problems caused by the regional clustering characteristics of the risk distribution cannot be ignored.While from the perspective of the risk diffusion mechanism,the region has the heterogeneity and the economic developed area is less than the developed area.Moreover,this paper tries to build the theoretical framework of local government debt risk analysis from the perspective of financial sustainable development and suggests that the local government should be independent of disposable income after eliminating rigid money investment as the main basis to judge the solvency.On this basis,this paper analyzes the independent disposable income and rigid expenditure characteristics of local governments in the new normal,and makes a judgment on the solvency of local governments.And the study found that local governments in China since economic new normal affordable repay financial resource present the downward trend,of which 2015's drop is higher,while resources distribution differences between regions,low-income provinces financial volatility is significantly higher than high income provinces.The paper then analyzed the current affordable repay funds to debt risk of local government and the influence of nonlinear fiscal response function to measure of debt ceiling space.By measuring the results,it is found that the current local government debt money still can make effective response to rising debt,whose limit is about 186%.Thirdly,this paper makes a theoretical and empirical study on the mechanism of the formation of local government debt risk and the efficiency of debt investment in the framework of debt risk analysis.The study found that local government investment efficiency has a significant negative influence on debt risk,while the higher investment efficiency in the face of the leverage of exogenous shock in the process of volatility of smaller,and the economic efficiency of local government investment in our country since the new normal drop is exacerbated by the current debt risk problems.Then,this paper summarizes the practice of foreign governments' debt risk management from the perspective of fiscal sustainability.Finally,based on its analysis and summary,this paper puts forward feasible policy Suggestions for local government debt risk management.From the perspective of fiscal and taxation system,it is suggested that the local government should be focused on clear functions,improve the efficiency of government spending and steady of local government finance sustainable local tax system construction,and reduce government debt risk.From the perspective of debt risk endogenous mechanism,it is believed that we should construct a multi-level dynamic debt risk supervision system,promote debt management strategy,and promote the transparency of debt information.In improving the financial market system,it is suggested that we should promote the formation of local government bond market mechanism and accelerate the reform of credit rating system.The main research contents of this paper include the following eight parts:The first part is the introduction,which expounds the research background and significance of the thesis,and the main research contents,methods and innovation of the thesis.The second part is the literature review of debt risk research based on fiscal sustainable perspective,which is about the causes and measures of sustainable fiscal inspection,debt risk,the dynamic stochastic general equilibrium model used in the field of fiscal policy and government debt comb and summaries are made for later theory and the empirical research foundation.The third part is the theoretical basis of debt risk research based on fiscal sustainable perspective.Which mainly referrers the sustainable theory,the fiscal debts risk management theory and dynamic stochastic general equilibrium theory,while analyses the theoretical basis for China's local government debt risk evaluation and management of the guiding significance.The fourth part is the present situation and risk of local government debt,which first analyzes the growth of government debt in our country and the local government debt and size,and introduce the reform of local government debt management in our country since the new normal situation,then measure the current our country local government debt risk by the method of entropy and empirically analyzes the spatial spillover mechanism of local government debt risk in China by of space Doberman model.The fifth part is the local debt risk analysis based on fiscal sustainable perspective.This chapter starts from the fiscal sustainable perspective and puts forward the analysis framework of local government debt risk.Then,the sustainable situation of local governments' fiscal sustainability under the new normal is described and the financial situation of local governments in China is analyzed from the perspective of fiscal revenue and fiscal expenditure.Finally,this article analyzes the current overall debt risk of local government in our country from the perspective of debt financial nonlinear fiscal response function to our country local government debt space limit overall judgment.The sixth part is a study on the relationship between fiscal investment efficiency and debt risk in local governments based on fiscal sustainability.This chapter first starts from the perspective of financial sustainable government investment to the influence of local government debt risk mechanism.Then this paper analyzes the causes of debt risk accumulation in the fiscal expenditure of local government in China under the new normal of economy.Finally the effect of local government's financial investment efficiency on the debt risk is investigated by using the quantitative model.The seventh part is a reference to local government debt risk management based on fiscal sustainable perspective.Through the introduction and analysis of western developed countries in the local government debt risk management,it is suggested to promote financial sustainable good practice and experience for China's local government debt risk effective governance to lay the foundation.The eighth part is the policy proposal of the local debt risk management based on fiscal sustainability under the new normal of economy,which draws lessons from foreign experience and combining the current our country economy development and the reality of the fiscal and taxation reform,and put forward to promote sustainable and reduce the debt risk of local government revenue and expenditures of the policy recommendations under the perspective of sustainable local government debt risk analysis framework as the basis,combining with the Chinese local government debt risk under the new normal basic judgment and characteristics of research,The innovation of this paper is:1.In this paper,based on the measure of China's local government debt risk,focus on the debt risk of spatial spillover effect and the transmission mechanism,and its study found that local government debt risk since the new normal economy has experienced rapid rise first then appeared signs of stabilization in 2016,which has the characteristics of high risk and low risk gathered in the aspect of spatial distribution of debt risk and significant heterogeneity between the different provinces in terms of risk spillover economic dimension.2.This paper is based on the proposed under the perspective of sustainable local government debt risk analysis framework,focusing on economic sustainable development of local government in China under the new normal can repay money changes in the process of analysis.In affordable repay financial impact on the debt risk,this paper uses the nonlinear fiscal response function to our country local government debt space limit calculation and found that local government in China affordable repay funds still has the ability to make active response to changes in leverage,through fiscal response function test found that China's local government debt ceiling of 186%.For debt risk in financial investment efficiency effects,this paper uses dynamic stochastic general equilibrium model to set up the government's intertemporal budget constraint conditions to indentify the differences of investment efficiency ratio in dynamic change,which find that public capital output elasticity and leverage existing negative mechanism,under the background of higher investment efficiency,has less leverage "hump" reaction caused by volatility exogenous shocks.3.Based on the practice of international experience and the reality of our country,this paper provides feasible policy suggestions for resolving local government debt risk and improving debt management from the perspective of fiscal sustainability.However,debt is put forward in the next step in the process of risk management and local government should be "because ShiCe" reasonable planning for future financing needs,matching reasonable local financing scale on the basis of future population flow and industrial assembly feature;it is suggested that we should improve the local taxation system,relax the local tax base,and choose a reasonable combination of tax system to reduce the impact of tax fluctuation on debt service,increase the allocation efficiency of debt investment and pay attention to the effect of the tax increase on economic stimulus and externality.It is also suggested that we should pay attention to the management plan of local government debt in the course of issuing and minimize the risk of default risk,to explore and establish a dynamic risk supervision system based on economic simulation environment to improve the timeliness and effectiveness of debt risk judgment.