Research On Governmental Crossing Decision-Making Authorities And Fiscal Incentive Mechanism

During the course of advancing the market economy,it is important to deal with the fiscal relation between the governments.To improve the relation,it is inevitable to balance between the fiscal centralization and decentralization.In the countries with market economy and fiscal decentralization system,the theory of fiscal decentralization was emphasized extensively.Concerning the relationship between central and local governments,the present theories consider that fiscal decentralization may make the local governments exert information advantage better,and improve the supply efficiency of public goods.It may also provide them better economic promotion to preserve marketing-led economy.The decision-making authorities between the central and the local governments is the foundation of the theory of fiscal decentralization.Demarcating crossing decision-making authorities between governments scientifically is an important but a difficult issue, which decides the fiscal revenues and expenditures of governments, and the efficiency fiscal transfer payment.One of main problems is the incentive mechanism in the relationship between central and local governments.there are two primary modes of the incentive mechanism.One is fiscal transfer payment,the other is job evaluation of local officeholder. The basic problem of fiscal incentive mechanism is to design a base of an incentive mechanism between the central and local government.The dissertation focus on the crossing decision-making authorities between the central and local government and discuss the efficiency of fiscal transfer payment.First of all,this dissertation analyzes develop conditions of governmental decision-making authority relation in domestic and foreign country through neatening the interrelated literatures.To make a clear distinction of central and local government decision-making authority, this dissertation manages welfare-economics theory,according to the rule of cost-receive,in point of social welfare maximum view,makes a math model,makes a whole distinction to decision-making authority in market economic condition。Then,this dissertation uses the the principal-agent model to analyze the crossing decision-making authorities between the central and local government.According to the model of Holmstrom and Milgrom, the dissertation improves the model by adding a probability constraint parameter,and then concluding that both central government and local government should try their best to reduce the joining-effort-cost coefficient. Furthermore,Considering the different expectation on natural state, the, model is improved on,the model becomes more practical and more operational.According to the model, during the decentralization, the central government should communicate with local governments, to form a relatively impersonal expectation. The dissertation establishes a Supervision and Encouragement model: Viewing results of local government behaviors, is to infer their conditional expectation, which can be taken as the basis of the incentive mechanism and supervision.On the bases of former theoretic analysis, the dissertation uses Cobb-Douglas production function, takes fiscal expenditures of central and local governments as investment parameters, and gets the optimal decentralization index by making the provision of public goods most.