Study On The Influence Of Local Government Debt On Economic Growth And Its Quality

Since the outbreak of the global financial crisis in 2008,countries around the world have implemented expansionary fiscal policies and government debt has increased rapidly,which has injected vitality into economic growth and the quality of economic growth to a certain extent.However,some countries are faced with debt crisis because they cannot pay their debts,thus hindering economic development,which has aroused attention and concern from all circles.Therefore,it has become an important issue for policy makers to find the balance point of debt level and minimize the negative impact of excessive debt on economic growth.Therefore,it is very necessary to study the effect of local government debt on economic growth.On the other hand,since our country is turning into a high quality development stage,we should not only pay attention to the quantitative research of economic growth,economic growth quality research also has practical significance and policy value,and economic growth and quality support each other.By studying the impact of local government debt on the quality of economic growth,we can better reveal the mechanism behind its impact on economic growth.Based on the research of government debt related literature,this thesis not only examines the impact of local government debt on economic growth,but also examines the impact of local government debt on the quality of economic growth from the two dimensions of economic production efficiency and innovation level ability.In terms of data processing,considering the difficulty and availability of data collection,this thesis covers the following two aspects of government debt data: first,the debt that the government is responsible for repayment,namely general government debt and special government debt data released by the Ministry of Finance;second,the urban investment bonds issued by provincial and local financing platforms in the wind database.From the perspective of the impact of local government debt on economic growth itself,the conclusion of this thesis shows that,for the whole sample,the impact of local government debt on economic growth is significantly negative.When the government debt increases by 1percentage point,the economic growth rate decreases by about 3.6 to 4.2 basis points.In terms of the mechanism of impact,the expansion of local government debt may hurt economic growth by lowering the investment rate/crowding out private investment.When studying the relationship between government debt and economic growth by sample,China is divided into east,middle and west regions.The influence of government debt on economic growth in central and western regions is significantly negative,while the influence of local government debt on economic growth in eastern regions is positive.In the sub-sample conclusion,the influence of government debt on economic growth is different.Therefore,this thesis analyzes the nonlinear influence by introducing the square term of local government debt into the model.The conclusion shows that the influence of local government debt on economic growth presents an "inverted U" shape,low government debt has a significant promoting effect on economic growth,and with the increase of government debt,its promoting effect on economic growth will be weakened,which is consistent with the conclusion of different regions,namely,the eastern region has a relatively low government debt rate due to the high GDP scale.Further expansion of local government debt could boost economic growth;On the contrary,although the scale of government debt is not high in the central and western regions,the expansion of local government debt will have a negative impact on economic growth due to its low GDP level and relatively high government debt ratio.From the perspective of the impact of local government debt on the quality of economic growth,this thesis examines the impact of local government debt on the quality of economic growth from the two dimensions of economic production efficiency and innovation level ability.In terms of the effect of local government debt on economic production efficiency and the results of its mechanism,the conclusion is similar to that of economic growth itself,that is,local government debt reduces economic efficiency.In terms of mechanism,by introducing the cross-product term between local government debt and the scale of basic investment,this thesis confirms that local government debt reduces the efficiency of investment by expanding the scale of inefficient public basic investment led by the government,thus inhibiting the production efficiency of regional economy.On the other hand,from the perspective of the influence and mechanism of local government debt on regional innovation capability,the empirical results in this thesis show that the influence of local government debt on regional innovation capability is relatively vague.Specifically,by introducing the cross-multiplication term between local government debt and investment in education and innovation,this thesis tests the two mechanisms of investment in education and innovation.The results show that although local government debt is beneficial to the improvement of regional innovation ability from the mechanism of investment in education,it inhibits the level of regional innovation ability from the mechanism of investment in innovation.To sum up,the empirical regression of this thesis respectively tests the impact of local government debt on economic growth and the quality of economic growth and the mechanism of action,and the conclusion shows that the impact of local government debt on economic growth and the quality of economic growth is generally negative: as for the former,due to the existence of nonlinear influence,the impact of local government debt presents regional differences;In terms of the quality of economic growth,local government debt has a more negative impact.From the perspective of economic efficiency,local government debt has a generally negative impact.From the perspective of innovation level,although local government debt is beneficial to the improvement of regional innovation ability from the perspective of education input mechanism,it inhibits the level of regional innovation ability from the perspective of innovation input mechanism.And there is no general nonlinear effect.