The Research On Local Governments' Investment Behavior

Surrounding the theme of local governments' investment behavior and economy overheat, this paper firstly puts up correlated measure of the relationship between local governments' investment behavior and economy overheat since the reform and open policy, on the basis of definiting the connotation of local governments' investment behavior and economy overheat separately. The conclusion is that local governments' investment behavior easily results in the periodic overheat of economy and goes against macro-economic stability. Further, on the basis of other scholar' analysis, the paper analyses the local government and officials' change on behavior motivation and restrictive factors such as administrative regime, the soft constraint of system and local governments' competition. On this basis, utilizing theoretic hypothesis of public choice school, the paper puts forward utility function about local government, central government and individual, and establishes equilibrium model centered local government. This helps us hold the uppermost factors about why the local government resulted in the economy overheat and have very clear impression on it. At the same time, recognizing our local government's investment played a constructive role in our country' economy, so the author brings forward proper evaluation on local government combining the phase of reform. In the end, the paper advances corresponding policy suggestions on the basis of the above analysis.