Essays on Federalism and Local Finance in China
type: CreativeWork
description: This dissertation consists of three chapters that cover topics on federalism and local finance in China. Chapter 1 - Economic Growth, Fiscal Inequality and Fiscal Decentralization: Evidence from China. This paper investigates the impact of inequality in the geographic distribution of fiscal resources on regional economic growth under fiscal decentralization policy in the context of China's experience, using panel data for 28 provinces over the period 1987–2010. In the recent past, the structure of decentralized government in China has undergone two significant fiscal reforms: the ``Fiscal Responsibility System" (FRS) in 1987-1993, and the ``Tax Sharing System" (TSS) in 1994. I find that there are different impacts of overall fiscal inequality on economic growth pre-and post-1994. Second, I show that fiscal decentralization could improve regional growth in China. Finally, this paper finds that the use of extra-budgetary funds could reduce the economic growth gap between rich and poor provinces. Chapter 2 - Fiscal Decentralization and Local Economic Growth. This paper develops an endogenous growth model with spillovers of public goods and mobile capital to examine economic growth and social welfare under decentralized and centralized systems. I first consider a setting with an exogenous ratio of productive government expenditure to the total expenditure and then a model with the endogenous ratio. In both cases, growth rates are lower and social welfare is higher for both the developed and the less-developed regions in the centralized system than in decentralized systems. Finally, I also use a fiscal decentralization reform in China – namely, the province-managing-county (PMC) reform – to examine the effects of fiscal decentralization on local economic growth. The PMC reform abolished the subordinate fiscal relationship between prefectures and counties and transferred much of the tax and spending authority from the prefecture to the county level. Chapter 3 - Local Fisc…
abstract: This dissertation consists of three chapters that cover topics on federalism and local finance in China. Chapter 1 - Economic Growth, Fiscal Inequality and Fiscal Decentralization: Evidence from China. This paper investigates the impact of inequality in the geographic distribution of fiscal resources on regional economic growth under fiscal decentralization policy in the context of China's experience, using panel data for 28 provinces over the period 1987–2010. In the recent past, the structure of decentralized government in China has undergone two significant fiscal reforms: the ``Fiscal Responsibility System" (FRS) in 1987-1993, and the ``Tax Sharing System" (TSS) in 1994. I find that there are different impacts of overall fiscal inequality on economic growth pre-and post-1994. Second, I show that fiscal decentralization could improve regional growth in China. Finally, this paper finds that the use of extra-budgetary funds could reduce the economic growth gap between rich and poor provinces. Chapter 2 - Fiscal Decentralization and Local Economic Growth. This paper develops an endogenous growth model with spillovers of public goods and mobile capital to examine economic growth and social welfare under decentralized and centralized systems. I first consider a setting with an exogenous ratio of productive government expenditure to the total expenditure and then a model with the endogenous ratio. In both cases, growth rates are lower and social welfare is higher for both the developed and the less-developed regions in the centralized system than in decentralized systems. Finally, I also use a fiscal decentralization reform in China – namely, the province-managing-county (PMC) reform – to examine the effects of fiscal decentralization on local economic growth. The PMC reform abolished the subordinate fiscal relationship between prefectures and counties and transferred much of the tax and spending authority from the prefecture to the county level. Chapter 3 - Local Fisc…
author: Zhang, Jiakai
keywords: Growth and Development, Public Economics, Regional Economics, Fiscal Decentralization, Local Finance, Fiscal Inequality, Economic Growth, China, Regional Competition
date published: 2022-09-01T07:00:00Z
date modified: 2026-07-24T01:59:05Z
provider: City University of New York - Graduate Center
publisher: Networked Digital Library of Theses and Dissertations
type: WebPage
source organization: The Graduate School and University Center of The City University of New York