| The debt risk appetite of local government is the basic attitude of the local government to debt risk under the system incentive and restraint,which determines the borrowing behavior of local government and the risk level of debt.The system of influencing the local government's debt risk appetite includes financial system,performance appraisal mechanism and government debt supervision system.For a long time,these institutions have arranged the local government to face the imbalance of financial power and responsibility scope,the strong incentive and the soft constraints of the debt behavior,which promote local government to choose excessive debt.This is the root cause of the rapid growth of debt and the rising debt risk.The existing studies on the debt risk appetite of local government are mainly from the static perspective,which are not paid much attention to the evolution process and mechanism under the condition of institutional change.This study combines the institutional analysis framework and the game analysis framework of the existing studies,and studies this question from the perspective of dynamic evolution,which has practical significance and theoretical value.According to Samuelson et al.'s theory of public product and government debt,the of behavior government debt has both positive and negative effects,and central government needs to stimulate and restrain local government's borrowing behavior in order to achieve the dynamic equilibrium of economic income and debt risk.Using the institutional analysis framework of Williamson,this paper makes a comparative analysis on the evolution of local government's debt-related system and the evolution of the debt behavior.It found that when local government's debt behavior deviated from the expected target of central government,the central government would promote institutional change to change the local government's behavior objectives and constraints,so that the risk appetite was evolving and subjective,irrational and variable.At the same time,because the principal-agent structure between central government and local government has characteristics of multiple-multitasking,the incentive compatibility condition is difficult to achieve,central government continues to promote institutional changes.In other words,there is an interactive relationship between the institutional change and the evolution of local government debt risk appetite,and studying the interaction mechanism can reveal the evolution mechanism of risk appetite.Accordingly,the research ideas are as follows:this paper first assumes that the institution is a given constant,at which time local government faces a constant game rule,and then uses the complete information game model to analyze the generation mechanism of risk appetite under a given institution.On this basis,this study further analyzes the dynamic evolution of risk appetite under the condition of institutional change.First of all,this paper assumes that the institution is given,then the rules of the game of local government,central government and financial institution is constant,the local government's debt risk appetite is determined by the tripartite game equilibrium.This study explains the formation mechanism of local government's different debt risk appetite by solving the Nash equilibrium condition of the dual-group game of local government and financial institution and the tripartite game of local government,central government and financial institution.Then,using the Anonymous Theorem,this paper deduces the controlling conditions of risk preference:local government and financial institution in the game at the same time select the strategy of SPNE,and both sides of the discount factor to meet the critical value.In reality,if the above conditions can not be met,the local government will choose excessive debt,while financial institution choose to compete to give loans.This paper further extends the assumptions of the complete information dynamic game model to the situation of institutional change,imperfect information and bounded rationality.When the central government observes that the game equilibrium of local government and financial institution deviates from its expectations and the benefit of institutional change is greater than the costs,the central government will adjust the system to change the utility function and constraint of local government and financial institution,which will form a new equilibrium.By using Reinhard Selten's multi-population replicator dynamic differential equation,this paper establishes a two-group symmetric evolutionary game model for local governments and financial institutions,and solve the equilibrium points of the model under different institutional parameters.On this basis,this paper uses Friedman's Stability Jacobi Discriminant Matrix and computer simulation program to determine the stability of the above equilibrium points,deduces the evolution strategy of risk appetite in different institutional environment,and then obtains the four stages of evolution.It found that with the change of the institution,since the 1980s,China's local government debt risk appetite has experienced the evolution from risk aversion to risk preference.Since central government strictly supervised local debt in 2011,the risk appetite appeared to the trend of risk aversion.The study also found that in the four stages of evolution,the evolutionary strategies of local governments and financial institutions are presented as group equilibrium rather than individual equilibrium,which means that local governments and financial institutions both have "herding effect" in the process of expansion or contraction of debt.In order to verify the objectivity of the theoretical research conclusion,this study takes the Daxing District Government of Beijing as an example to analyze the evolution of its debt risk appetite,and study the economic background,the development stage and the development stage of the government's debt behavior from 2005 to 2014.The study finds that the government's debt risk appetite is in the state of evolution under the condition of institutional change,and it has experienced two stages of the enhancement and suppression of risk appetite,which is basically consistent with the theoretical research conclusion.The following conclusions can be drawn:Firstly,the evolution of local government debt risk appetite is the results of the mixed game of the central government,local government and financial institution under the condition of institutional change.Excessive borrowing may be suppressed by strengthening the accountability system,increasing information,extending the term of government officials and other means of assessment.Secondly,under the institutional change,the local government debt risk appetite has the characteristics of irrationality,and under the action of genetics,mutation and selection mechanism,it is in a state of repeated adjustment.Thirdly,the combination of evolutionary stable strategies of local governments and financial institutions all appear as single equilibrium rather than multiple equilibrium in the evolutionary system.This means that the central government needs to establish an early warning mechanism for debt risk appetite and continuously promote institutional changes to adapt the needs of macroeconomic regulation.This paper has three innovations.Firstly,this paper integrates the perspective of institutional analysis and game analysis from the existing research literature,and integrates macro-level institutional variables into micro-level behavior game mechanism,which can be used to explain how institutional change is driving the evolution of risk appetite.Secondly,on the basis of absorbing the existing research results,this paper overcomes the limitation of the existing static perspective and reveals the evolution law of risk appetite from the dynamic evolution perspective,which provides a theory reference for perfecting the management system of local government debt risk.Thirdly,this paper studies the inheritance,variation and selection mechanism of the evolution of local government debt risk appetite from the theory of evolutionary economy,and proves the instability of optimal system.This provides a theoretical basis for the central government to continue to promote the reform of the debt supervision system. |
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