Research On The Impact Of Policy Uncertainty On Local Government Debt Risk In China

How to effectively prevent and resolve the local government debt risk is the focus of the theoretical circle and government departments.In the context of promoting high-quality economic development,the continuous expansion of local government debt risks will undoubtedly bring about many adverse effects.Therefore,starting from the current system,it is of great practical significance to explore the causes of local government debt risk and put forward targeted countermeasures.Based on China's political system,this paper discusses the impact of policy uncertainty caused by official change on local government debt risk.Based on the panel data of 234 prefecture-level cities from 2006 to 2015 and the bidirectional fixed regression model,the following conclusions are drawn:(1)The policy uncertainty caused by the change of officials will significantly increase the debt risk of local governments.On average,the change of officials will increase the debt ratio of local governments by 7.6%;(2)Mechanism tests show that new officials,driven by "promotion incentives" and "officials' tournaments",will boost government investment by issuing more debt to offset the negative impact of policy uncertainty;(3)The heterogeneity analysis shows that the more overconfident officials,the stronger promotion incentives and the officials transferred from other places,the more significant the increase of local government debt risk will be after the post change.With the gradual strengthening of the central government's constraint on local government debt,the impact of official change on local government debt risk is no longer significant after 2014;(4)The paper also carries out the corresponding robustness test,and confirms the robustness and reliability of the research conclusion by replacing the debt risk measurement index and changing the regression clustering method.Compared with existing studies,this paper provides a new possible explanation for the causes of local government debt risk from the perspective of policy uncertainty.At the same time,based on the personal characteristics of officials,this paper also discusses the heterogeneous influence of official characteristics on local government debt risk,which is helpful to understand the important role of official characteristics in local government debt risk.This can not only provide policy enlightenment for effectively preventing and resolving local government debt risks,but also provide theoretical reference for the reform of local officials' assessment mechanism.