The Economic Behavior Of Local Governments In China:Explanation Under The Framework Of Fiscal Competition And Spatial Spillover

The GDP of China has maintained a relatively high rate of growth for a long period of time.During this process,local governments have played a really important role in promoting the market.The political and economic system of china can provide effective incentives for local governments.The significant effects of growth and competition has been showed in local governments' behavior.Local governments also have dual identities of public people and economic people.However,due to the limited political resources,in terms of collective organizations,the characteristics of the economic man are obvious.Local governments prefer to maximize off-budget income and maintain local finances revenue.With the rapid development of the economy,local governments have obtained high land revenue through financial competition.Taking into account the spatial correlation characteristics of local governments' economic behavior,the traditional econometric model is difficult to accurately analyze,so it is necessary to use the spatial econometric model to conduct empirical analysis from the perspective of fiscal competition and spatial spillover.In this situation,this article firstly reviews the relevant studies of the economic behaviors of Chinese local governments,fiscal competition,and spatial spillover.Then,defines the concepts of related variables and combining the related theories of local government economic behavior,this paper analyzes the influencing mechanism of financial competition and spatial spillover.Thereafter,in order to analyze the present situation of Chinese local governments' economic behavior,GeoDa software was used to initially examine the spatial correlation and describe the current situation from the perspective of scale,provinces,and regions.For fiscal competition,it mainly includes financial expenditure competition and yardstick competition and we also analyze the status from the perspective of provinces,and regions.After that,using the panel data of 31 provinces in China between 2003 and 2015,based on empirical tests,spatial econometric methods are used to establish Spatial Durbin Model for general analysis and the method of effect decomposition is used to accurately measure the spatial spillover effect.In addition,based on the full sample analysis,this paper also studies the impact of fiscal competition and spatial spillover on the economic behavior of local governments in China from the regional perspective.The results show that the economic behavior of Chinese local governments has a significant positive spatial correlation and is a strategic behavior that mimics each other.From the national sample data,both competition of fiscal expenditure and yardstick competition have a significant role in promoting the local governments'economic behavior,but the spillover effect is not significant.From the empirical analysis at the regional level,the effect of competition of fiscal expenditure on the economic behavior of local governments has obvious regional heterogeneity,with significant positive direct effect and spillover effect only in the eastern region.The direct effect of yardstick competition is not significant in various regions,but the spillover effect of yardstick competition is obvious,the regional differences are mainly reflected in the size of the coefficient.We find the coefficient of western region is the largest one,followed by the middle,and the eastern region is the smallest one.Afterwards,based on the above conclusions,put forward corresponding policy recommendations.Finally,summarize the conclusions of the full text and propose research prospects.