A Study On The Convergence And Divergence Of Local Government Debt And Regional Economic Growth In China

In response to the global financial crisis and the post disaster reconstruction after the Wenchuan earthquake,the Chinese government launched an investment drive with a total scale of more than 400 billion yuan,opening a new stage of debt financing through various channels in various regions.The debt balance increased from 10.72 trillion yuan in 2010 to 18.39 trillion yuan in 2018,with the debt accounting for more than 20% of GDP.Now,local government debt has become an important financing means for infrastructure construction and economic development in various regions.In addition to some risks caused by the lack of relevant regulatory means,local government debt has an important contribution to the promotion of local economic development.This paper studies the government debt behavior from the perspective of economic growth,focuses on the relationship between regional economic development and local government debt,discusses the effect of government debt from different levels of regional development,and explores the effective way of debt to economic development.This paper first summarizes the domestic and foreign research from the theoretical aspect,and divides it into three parts: the beneficial theory of debt,the harmful theory of debt and the neutral theory of debt.Secondly,using the debt audit report issued by the National Audit Office to explain the current situation of government debt,master the development of national debt,and analyze the causes of such phenomena.In the aspect of theoretical model construction,by referring to the former IS-LM theory and introducing the government departments,the paper constructs the short-term growth model IS-LM-RE model of debt,which aims to explain that the government debt affects the regional economy by influencing regional consumption and investment,and produces multiplier effect on the national economy in the short term;Through the analysis of Barro model,it is concluded that there is a long-term non-linear relationship between government debt and economic growth,and then two hypotheses are put forward: 1.Local government debt has a non-linear impact on economic growth;2.Local debt has different impact oneconomic growth in different regions.In the empirical aspect,the VAR model is used to verify that the government debt has a positive role in promoting the national economy in the short term.The non-linear relationship between government debt and economic growth is verified by the fixed effect model.The conclusions of this paper are as follows:1.In the short term,the local government has a multiplier effect on economic growth by borrowing investment and consumption.In the long run,there is a "U" nonlinear relationship between the debt ratio and the economic growth of our local governments;2.There is an optimal debt scale.Government borrowing should be moderate,and once it exceeds the appropriate value,debt has a restraining effect on economic growth;3.Local government debt plays a role of convergence and divergence in regional economic growth.By testing the northeast,the east,the middle and the west respectively,it is concluded that the government debt has a convergent effect on the "crowding out effect" of the East with good economic development,while for the northeast,the middle and the west,the government debt provides financial support and plays a divergent role in economic growth.On the basis of the existing problems and conclusions,suggestions are put forward: dialectical view of debt problems,standard borrowing mechanism,strict debt management system,and handling of stock debts.