Given the existence of real estate market bubbles and risks arising from high government debt,countries are faced with the challenge of preventing systemic risks.This study investigates the macroeconomic dynamics of t...Given the existence of real estate market bubbles and risks arising from high government debt,countries are faced with the challenge of preventing systemic risks.This study investigates the macroeconomic dynamics of the real estate market and local government debt risk from the perspective of liquidity constraints.We build a dynamic stochastic general equilibrium model with real estate and local government debt risk based on the New Keynesian-Dynamic Stochastic General Equilibrium Model(NK-DSGE)model to investigate the transmission path of local government debt risk under real estate regulation.In addition,we analyze the risk transmission between the real estate market and local government under different tax systems and investigate the shock to household welfare from a local government debt default.The results show monetary policy can effectively control the scale of local government debt to reduce default risk.An increase in property taxes that restrains housing demand can effectively regulate the real estate market.Although reducing taxes can increase macroeconomic output,reducing tax rates on consumption,capital,and labor weakens the liquidity of household assets.Further,lowering taxes increases local government default risk,which reduces household welfare and makes it more difficult for local governments to deleverage.Our findings provide important insights for countries seeking an effective real estate regulation mechanism to curb local government default risk.展开更多
The Local Debt Management System Reform,introduced in 2014 and implemented in subsequent years,was a key initiative by the Chinese government to mitigate local government debt risks.Using its implementation as a natur...The Local Debt Management System Reform,introduced in 2014 and implemented in subsequent years,was a key initiative by the Chinese government to mitigate local government debt risks.Using its implementation as a natural experiment,this study examined its impact on corporate tax burdens.The results indicated that tighter debt constraints significantly increased corporate tax burdens,as local governments intensified tax collection to offset reduced debt-related revenue.This effect was stronger in areas that were reliant on land financing and less economically developed.Further analysis revealed that,rather than reducing expenditure,local governments sought alternative revenue sources,including urban investment bonds,land transfer income,and public-private partnership projects.These findings illuminate local fiscal behavior under debt constraint and provide insights for the design of institutional frameworks aiming to manage local debt risks.展开更多
This paper examines total factor efficiency and productivity performance by taking into account local government debt （LGD） in 31 Chinese provincial regions for the period 2000-2013. The results show that neglecting...This paper examines total factor efficiency and productivity performance by taking into account local government debt （LGD） in 31 Chinese provincial regions for the period 2000-2013. The results show that neglecting LGD may overstate economic performance in Chinese provinces. The eastern region shows better performance in single jactor efficiency and total factor efficiency than the non-eastern regions. The western region shows the worst total factor performance. The north-eastern region is the only region that has experienced a decline in total factor performance. The state-dominated, investment- driven development model may help technological progress across Chinese regions but could lead to significant factor misallocation. We argue that biases towards more state- dominated investment and land supply in less productive western, central and north- eastern regions, at the expense of investment and land supply in more productive eastern regions, have contributed to the recent slowdown in economic growth in China. Therefore, .further market-oriented reforms in factor markets should be considered in the future.展开更多
Decentralization can alter the incentive structure of local governments and one outcome of this is debt accumulation. Based on the “Province-Managing-County” pilot policy, a fiscal decentralization reform devolving ...Decentralization can alter the incentive structure of local governments and one outcome of this is debt accumulation. Based on the “Province-Managing-County” pilot policy, a fiscal decentralization reform devolving fiscal power from the prefecture-level city to the county level, we assess the impact of fiscal decentralization on local government debt using a difference-in-differences model with a unique county-level dataset from 2011 to 2019. According to the study findings, the “Province-Managing-County” reform resulted in an average increase of 5.758 percent in the local government debt ratio across the pilot counties. Mechanism analyses suggest that this may have arisen from changes in the incentive structure, including external pressures from government assessments and internal developmental needs for promotion, leading to a rise in expenditure pressures on local governments. The role of supervision in mitigating the impact of fiscal decentralization on debt growth was also demonstrated, indicating that an appropriate supervision mechanism must be in place in conjunction with a decentralization policy.展开更多
Theories based on fiscal guarantees cannot explain either the fact that the continuously decline in local fiscal resources has not significantly increased local government financing costs,or the fact that local govern...Theories based on fiscal guarantees cannot explain either the fact that the continuously decline in local fiscal resources has not significantly increased local government financing costs,or the fact that local government debt has been rising at a time of strict central government regulation.The theoretical and empirical analyses provided in this study show that it is the financial resources under local government control that provide the implicit guarantee for local government debt.Such financial resources lower local governments’financing costs but have the potential to lead to the contagion of financial risk through local government to the financial sector.Therefore,to look at the question solely in terms of either fiscal or financial sector guarantees will not be sufficient to resolve the problem of local government debt.The central government needs to coordinate fiscal and financial policies under a joint management framework in a way that rationally disperses and resolves the risks attached to local government debt and avoids the assumption of excessive risk by either sector.At the same time,close attention should be paid to local financial institutions’asset quality and their money market reputation to avoid the risk of contagion from local financial institutions to local public finance.展开更多
基金supported by the National Natural Science Foundation of China(Nos.72271135,72141304,71901130)National Social Science Fund of China(22&ZD117)+3 种基金Laboratory of Computation and Analytics of Complex Management Systems(Tianjin University)Special Funds for Taishan Scholars(tsqn202211120)2024 Qingdao Finance Society Key Project2024 Qingdao Social Science Planning Project.
文摘Given the existence of real estate market bubbles and risks arising from high government debt,countries are faced with the challenge of preventing systemic risks.This study investigates the macroeconomic dynamics of the real estate market and local government debt risk from the perspective of liquidity constraints.We build a dynamic stochastic general equilibrium model with real estate and local government debt risk based on the New Keynesian-Dynamic Stochastic General Equilibrium Model(NK-DSGE)model to investigate the transmission path of local government debt risk under real estate regulation.In addition,we analyze the risk transmission between the real estate market and local government under different tax systems and investigate the shock to household welfare from a local government debt default.The results show monetary policy can effectively control the scale of local government debt to reduce default risk.An increase in property taxes that restrains housing demand can effectively regulate the real estate market.Although reducing taxes can increase macroeconomic output,reducing tax rates on consumption,capital,and labor weakens the liquidity of household assets.Further,lowering taxes increases local government default risk,which reduces household welfare and makes it more difficult for local governments to deleverage.Our findings provide important insights for countries seeking an effective real estate regulation mechanism to curb local government default risk.
文摘The Local Debt Management System Reform,introduced in 2014 and implemented in subsequent years,was a key initiative by the Chinese government to mitigate local government debt risks.Using its implementation as a natural experiment,this study examined its impact on corporate tax burdens.The results indicated that tighter debt constraints significantly increased corporate tax burdens,as local governments intensified tax collection to offset reduced debt-related revenue.This effect was stronger in areas that were reliant on land financing and less economically developed.Further analysis revealed that,rather than reducing expenditure,local governments sought alternative revenue sources,including urban investment bonds,land transfer income,and public-private partnership projects.These findings illuminate local fiscal behavior under debt constraint and provide insights for the design of institutional frameworks aiming to manage local debt risks.
文摘This paper examines total factor efficiency and productivity performance by taking into account local government debt （LGD） in 31 Chinese provincial regions for the period 2000-2013. The results show that neglecting LGD may overstate economic performance in Chinese provinces. The eastern region shows better performance in single jactor efficiency and total factor efficiency than the non-eastern regions. The western region shows the worst total factor performance. The north-eastern region is the only region that has experienced a decline in total factor performance. The state-dominated, investment- driven development model may help technological progress across Chinese regions but could lead to significant factor misallocation. We argue that biases towards more state- dominated investment and land supply in less productive western, central and north- eastern regions, at the expense of investment and land supply in more productive eastern regions, have contributed to the recent slowdown in economic growth in China. Therefore, .further market-oriented reforms in factor markets should be considered in the future.
基金The authors are grateful for support from the National Natural Science Foundation of China(Nos.71973118,72173136,and 72103208)National Social Science Foundation of China(No.20&ZD080)the Fundamental Research Funds for the Central Universities of Zhongnan University of Economics and Law(No.2722024AK004).
文摘Decentralization can alter the incentive structure of local governments and one outcome of this is debt accumulation. Based on the “Province-Managing-County” pilot policy, a fiscal decentralization reform devolving fiscal power from the prefecture-level city to the county level, we assess the impact of fiscal decentralization on local government debt using a difference-in-differences model with a unique county-level dataset from 2011 to 2019. According to the study findings, the “Province-Managing-County” reform resulted in an average increase of 5.758 percent in the local government debt ratio across the pilot counties. Mechanism analyses suggest that this may have arisen from changes in the incentive structure, including external pressures from government assessments and internal developmental needs for promotion, leading to a rise in expenditure pressures on local governments. The role of supervision in mitigating the impact of fiscal decentralization on debt growth was also demonstrated, indicating that an appropriate supervision mechanism must be in place in conjunction with a decentralization policy.
文摘Theories based on fiscal guarantees cannot explain either the fact that the continuously decline in local fiscal resources has not significantly increased local government financing costs,or the fact that local government debt has been rising at a time of strict central government regulation.The theoretical and empirical analyses provided in this study show that it is the financial resources under local government control that provide the implicit guarantee for local government debt.Such financial resources lower local governments’financing costs but have the potential to lead to the contagion of financial risk through local government to the financial sector.Therefore,to look at the question solely in terms of either fiscal or financial sector guarantees will not be sufficient to resolve the problem of local government debt.The central government needs to coordinate fiscal and financial policies under a joint management framework in a way that rationally disperses and resolves the risks attached to local government debt and avoids the assumption of excessive risk by either sector.At the same time,close attention should be paid to local financial institutions’asset quality and their money market reputation to avoid the risk of contagion from local financial institutions to local public finance.
