Is Local Government Competition An Important Factor In The Expansion Of Public Debts?

Since the outbreak of the financial crisis in 2008,global economic development has entered a period of stagnation.However,in the post-crisis era,affected by the global economic cycle,China's economic development has moved from the original period of high-speed growth to the stage of "new normal".No matter in the period of financial crisis or in the current "new normal" stage,the government's macroeconomic regulation role has become increasingly important.Active fiscal policy and prudent monetary policy will become the government's macroeconomic control policy choices from now to the future.The implementation of active fiscal policy means through large-scale fiscal investment and financing for national construction,but should notice is under the "new normal" as main component of finance income tax revenue at risk of falling,increasing fiscal responsibility and fiscal income basic remain unchanged even slightly down the budgetary revenues and expenditures caused by the conflict requires government financing through other channels.Government bonds,as the main way of government financing,have attracted a lot of attention,which is not only limited to the national debt issued by the central government,but also more focused on local government debt problems.The reason is that China's local government debt is not standardized and transparent for a long time,and it is not easy to supervise,manage and control the scale of the problem.Based on the above background,this paper focuses on discussing the causes of the expansion of the scale of local government debt,and hopes to put forward practical and effective policy Suggestions for controlling the scale of local government debt and supervising the risk of debt.This paper is written from the following parts:The first chapter is the introduction,which mainly introduces the background of this paper,the research results of the existing literature,the overall thinking and framework of the research,as well as the innovation and shortcomings different from the existing research.Through combing domestic and foreign literatures,it is found that the competition mode of local government in China is quite different from that in western countries.The characteristics of government competition in western countries are closely related to the political system of electing by voters.However,the government competition in China is carried out under the political centralization.The central government replaces the voters as the voting subject,so the government officials in China are responsible to the superior government.Based on the above background,this paper discusses the impact of local government competition behavior with Chinese characteristics on the scale of government debt.The second chapter,the core concept and the related theory,in this part explains the local government competition,scale competition,local government debt,this paper discusses the concept of "entrust-agent" theory and through the analysis found that the central government tends to take yardstick competition mode of relative indexes of performance evaluation of local government officials,and under such evaluation criteria,the correlation of local government behavior will be significantly enhanced.The third chapter the practice of local government debt scale expansion,this chapter analyses from 2000 to 2018,the local government fiscal responsibility and ability of income gap found that exists in reality factors,the expansion of local government debt scale based on the review of the local government debt to locate the process of standardization and regulation strictly,found that government debt is more inclined to support local government infrastructure spending.Chapter four analyzes the influence mechanism of local government competition and debt scale growth.This chapter systematically describes the influence mechanism of local government competition behavior on government debt scale in the way of scale competition,and draws the transmission mechanism diagram of local government debt scale expansion.In order to deepen the research,a theoretical model of the relationship between local government competition and debt scale is constructed.Through the analysis of the results of the model,the conclusion can be drawn :(1)the scale of local government debt is positively affected by the economic construction and people's livelihood construction in the region;(2)the scale of local government debt is positively correlated not only with local government expenditure in this region,but also with the scale of government debt in neighboring regions.(3)the scale expansion of local government debt is closely related to the horizontal competition of local governments.Fifth chapter empirically the impact of local government competition on debt,in the empirical test,this article USES the national 26 provincial government spatial panel data from 2006 to 2015,constructs the adjacency spatial weight matrix,geographical distance matrix inverse distance matrix and the economy,and on the basis of evaluating the spatial correlation of local government debt,found that local government debt is spatial agglomeration trend.Durbin using space model to examine the competitive behavior of the local governments in the region and surrounding areas the influence of local government debt scale,found the yardstick competition under the framework of local government competition will not only affect the region's debt scale,at the same time due to the promotion incentive strategy between local governments imitation,makes the region competition behavior of local government on the neighborhood also has positive influence on local government debt.Chapter six is the basic conclusion and policy Suggestions.Based on theoretical analysis and empirical results,the following conclusions are obtained :(1)the spatial agglomeration relationship of local government debt;(2)there is no significant relationship between the expansion of local government debt and fiscal deficit;(3)the impact of local government competition on the scale of government debt is significantly positive.In addition,the following policy Suggestions are put forward according to the above conclusions :(1)the central government should further improve the evaluation system for local government officials;(2)the term of office of local government officials can be appropriately extended to reduce the excessive reliance on the yardstick competition system caused by the "principal-agent" problem;(3)improve the disclosure system of local government debt information.