Research On The Impact Of Fiscal Decentralization On Local Government Debt Ris

The report of the Party’s 20 th National Congress points out that the bottom line of preventing systemic risks should be kept,and preventing and resolving local government debt risks is a key link.Since reform and opening up,our economy has developed rapidly and created the "Chinese miracle" which attracted worldwide attention,in which the local government has played an indelible role.However,local government debt is a double-edged sword.On the one hand,it solves the problem of insufficient funds in the process of economic construction,but on the other hand,it also lays risks and hidden dangers for the sustainable development of the subsequent society.The potential local government debt risk makes the sustainable development of the local economy face great crisis,and the long-term mismatch between the financial power and responsibilities under the fiscal decentralization system is the important reason that this risk is becoming more and more serious.Therefore,in the new development stage of the "14th Five-Year Plan" period,bringing fiscal decentralization into the analysis frame of local government debt risk,it is of important theoretical value and practical significance to adjust the fiscal decentralization relationship between our various levels of government as well as to dissolve the local government debt risk.In this paper,panel data of 30 provinces(municipalities)from 2014 to 2020 are selected as samples.Firstly,revised KMV model is used to calculate and analyze the risk of local government debt.Secondly,with the output default distance as the explained variable and the degree of fiscal autonomy as the core explanatory variable,a two-way fixed-effect model is constructed to explore the impact of fiscal decentralization on local government debt risk.Thirdly,two forms of soft budget constraint,transfer payment and land finance,are introduced as intermediary variables to explore the transmission mechanism of fiscal decentralization to local government debt risk.Finally,according to the empirical research results,relevant policy suggestions are put forward.The results show that: first,the fiscal decentralization characterized by "financial power concentration and administrative power decentralization" formed by the reform of tax sharing system is the direct cause of the financial gap of local governments and the aggravation of debt risk.Second,soft budget constraints in the form of transfer payment and land finance played an important intermediary role in the transmission process of the two,stimulating the increase of local government debt risk.Finally,based on the research conclusions,the paper puts forward relevant suggestions from four aspects: reasonable division of financial and administrative rights,hardening of budget constraint mechanism,improving the performance evaluation mechanism of officials,and improving the supervision and management mechanism of local government debt risk.