Research On Local Government Debt Risk Assessment In Regional Economic Networks

Provinces,whose economic development exists network growth caused by spatial spillover effect.At the same time,risk of debt repayment from government debt also exists in the regional economic network.Local governments in the economic network are actually faced with two goals that need to be balanced: to prevent local government debt risks and stabilize economic growth.So the study of the relationship between local economic development and local government debt and the interpretation of the risk of the existence of local government debt and its assessment have become the reality problem of building a harmonious society need to explore.Firstly,we introduce the regional production function with the economies of the two regions,and make a simple analysis of the regional economic development in the economy,so as to introduce the present situation of the network effect of the economic development of the 31 provinces.Furthermore,based on the KMV model,the theoretical analysis equation of the local government debt default rate under the background of regional economic correlation is deduced and its influencing factors are analyzed.And then the paper uses static space panel model and dynamic spatial panel model to analyze the relationship between the economic development and local government debt in the network,and compare two models,and finally draw the relevant conclusions.Be based of theoretical analysis,combined with characteristics of censored data,the paper do an empirical study by survival analysis.Furthermore,the spatial effect is taken as the starting point of the local government debt risk in the regional economic network,and combined with the related analysis,it is considered that Cox model with spatial frailty is a good empirical model selection,and the paper do a comparative analysis of empirical results.Finally,main conclusions of the paper are put forward: Local governments have large differences in the size of government debt,so central authorities should rationalize the regulation of local government debt,not "one size fits all" cut off government debt financing channels.Regional conomic development and local government debt development go hand in hand,resulting in a serious spatial distortion between the two.There is an inverted U-shaped relationship between the size of government debt and economic development in the context of provincial association.The government should reasonably define the debt threshold and strengthen the reasonable construction of the debt limit system.Do not consider the local government that is reluctance to repay and the government’s soft budget constraints,only from the local government’s ability to repay,the results of the study shows that the probability of non-occurrence of debt default of local government has dropped to 10% since 2010.The results of the survival analysis in this paper show that the government debt default rate in the areas where the economic development is too fast is higher than the government debt default probability in the areas with lower economic development.The results of the study considering the spatial effect and the absence of consideration of the spatial effect indicate that the effect of each covariate on the time of the local government’s debt default has changed.Based on the empirical point of view,this paper validates the influence of Cox model with spatial frailty on the risk factors of local government debt by the change of the posteriori mean of variance of stochastic effect and the DIC criterion.Furthermore,the paper puts forward further research directions.One is based on the perspective of regional economics to explore the risk of local government debt,and the second is to explore new trend of local government debt risk brought by the mechanism of local government debt movement under background of the new normal economy.