Research On The Impact Of Local Government Debt On Economic Growt

At present,the international and domestic environment has undergone profound and complex changes,and China’s economy is facing triple pressures of demand contraction,supply shock,and weakened expectations.In order to prepare for major risks and achieve employment protection and stable growth,it is necessary to organically combine the "tangible hand" of the government with the "intangible hand" of the market.It is necessary to pay more attention to the government’s macroeconomic regulation role in the economy,and assist in stable and healthy economic development.Local government debt can leverage the leverage of government finances and assist in the stable development of local economies.Therefore,utilizing local government debt to achieve stable people livelihood,employment,and development has also received widespread attention from the academic community.This paper focuses on the perspective of local government debt and conducts theoretical and empirical research on the impact,mechanism,and heterogeneity of local government debt on economic growth,which is of great theoretical and practical significance.Firstly,this paper establishes its theoretical foundation by reviewing relevant literature and theories to analyze the impact of local government debt on economic growth.Secondly,by studying the development process and formation mechanism of local governments in China,this paper is able to incorporate the characteristics of local government debt and fiscal system in China into its research.Lastly,through empirical analysis,this paper further investigates the impact,mechanism,and heterogeneity of local government debt on economic growth.The results of this study indicate that: firstly,based on the local government debt data from 2015 to 2021,explicit local government debt has a significant positive effect on economic growth,while implicit local government debt is detrimental to regional economic growth.Secondly,local government debt drives regional economic growth by increasing the investment rate,but the effect on promoting the total factor productivity of the region is not significant.Thirdly,from the perspective of the fiscal system,regions with higher levels of fiscal decentralization and promotion incentives have a stronger positive effect of local government debt on economic growth.From the perspective of fiscal resources,regions with higher proportions of land transfer income,financial decentralization and financial development have a stronger positive effect of local government debt on economic growth.As a result,based on the research findings,this paper proposes policy recommendations from the perspectives of local government debt risk management,debt structure optimization,fiscal system,and fiscal resource allocation.These recommendations aim to promote the scientific and reasonable use of local government debt tools and assist in achieving stable,healthy,and high-quality development of the local economy.