The Benefit Analysis On Local Government Debt In China

Local government debt problem has been one of the key issues of Chinese scholars. They based on public choose theory, game theory and principal agent theory, analysis the reasons for the formation of local government debt. Further more, they evaluate the effectiveness and impact of the economic and social development which local government debt can bring to our country. Most scholars believe that the local government debt solves the problem of cash-starved in the local construction issues, and promote local development, but the expandtion of local government debt will easily lead to financial crisis.This article argues that local government debt is essentially the convertion of social cost and government cost, it assumes the functions of public spending. When evaluate the local government debt, we can not based on the large scale of government debe to get the conclusion that local government debt does more harm than good. We should stand by the essence of local government debt, combined with the size of local government debt to analysis what functions the local government undertake in the local development. Then objectively evaluate the effectiveness of local government debt. Through the specific evaluation of local government debt, we can assume the deficiencies in public spending, improve the efficiency of local government debt financing and boot debt capital flows to promote local development.Based on the above ideas, This article constructs effective evaluation system of local government debt. Besides, this article combined with the size of local government debt and the specific expenditure of local government debt funds to measure the efficiency of local government debt in economy, community and politics. On the basis of the input and output of debt, the article chooses a lot of indicators to measure the efficiency of local government debt. In horizontal and vertical aspect, this article also analysis the benefition of different regions and different debt expenditure and further estimates how much different factors affect the benefit of local government debt.Based on the empirical analysis, this article get the conclusion that the use of government debt fund vary from region to region. So there is a big difference in the efficiency of expenditure of government debt funds. And the benefit of local government debt is also different. Among the factors which influence the benefit of local government debt, fiscal decentralization, the size of government and the region area negatively affect the benefit, but the number of population and economic development in the region is positively correlated with the benefit of local government debt.After summarizing the literature study on local government debt, this article firstly come up with theoretical analysis. Based on the cost and benefit of local government debt, the article argues that local government debt is essentially the convertion of social cost and government cost, it assumes the functions of public spending; secondly, this article divides the benefit of local goverenment debt into economical benefit, social efficiency and political benefit. Besides, this article also reveal the specific factors which influence the efficiency of local government debt; further more, the fourth chapter by building effective evaluation system and a two-stage envelopment analysis to evaluate the benefit liabilities in the sample region, given the efficiency of each part of the sample area. In the fourth chapter, the artical also induces the factors which affect local government efficiency into the second stage of the empirical analysis, using Tobit model to analysis how much different factors affect the benefit of local government debt; last but not least, the article come up with the countermeasures and suggestions to improve the efficiency of the use of local government debt.