Transfer Payment, structure of Fiscal Expenditure and the Incentive efficiencies of Local Governments’ Behavior
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| Title | Transfer Payment, structure of Fiscal Expenditure and the Incentive efficiencies of Local Governments’ Behavior
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| Author | Fu Wenlin and Shen Kunrong |
| Organization | (School of Economics, Nanjing University |
| Email | fuwenlin@nju.edu.cn；shenkr@nju.edu.cn |
| Key Words | Transfer Payments；Structure of Fiscal Expenditure；Local Government Behavior；Incentive Mechanism |
| Abstract | With the scale expansion of redistributing fiscal resources among regions during recent years, China’s fiscal equalization degree had improved a lot. This paper provides a simple general equilibrium model of local fiscal expenditure, and explores the allocation of local government expenditures to intergovernmental transfers. Using a panel data set from 1995 to 2006, we study the incentive properties of transfer payment on the fiscal expenditure behaviors of local governments. The findings indicate that transfer payment increased the local governments’ productive expenditure, and the local governments pursued more productive fiscal expenditure in underdeveloped areas. There is significant affection that the economic development and rigid demand for local public goods on the behaviors of local fiscal expenditure. To build fiscal equalization redistribution system, not only to further optimize the transfer payment structure, it is more important to promote the local fiscal expenditure transparency and democratic process. |
| Serial Number | WP149 |
| Time | 2011-11-01 |
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