Macroeconomic Effects,risks And Management Research Of Local Government Debt In China

Local government debt is a "double-edged sword." On the one hand,local government debt as a form of government revenues promotes local economic growth,and increases the supply of public goods,and improves intergenerational equity,and promotes the construction of new towns.On the other hand,with the rapid growth of local government debt,local government debt also can have many adverse effects on economic development such as inflation and financial instability.In 2008 Year,in response to the financial crisis,the Central Government has proposed 4 trillion investment plan.From 2009 to 2011 year State Council has granted the Central agent to issue local government bonds by 6000 billion yuan.While local governments at all levels have set up financing platform,local government debt has widened sharply.Chinese local government debt problem has caused Governments at all levels to attach great importance,central government has actively introduced various policy measures to strengthen local government debt management to prevent local government debt risk.In 2010 year the State development and Reform Commission,the people's Bank of China and the CBRC Department of corporate debt to local-government financing platforms were deployed to conduct a comprehensive clean-up work.In 2014 year the 12 th consideration at the tenth meeting of the NPC adopted the decision on the modification of the budget law of the People's Republic of China,allowing provincial governments to issue local government bonds.In 2015 annual central economic work Conference to prevent and defuse financial risks as one of 2016 five major structural reforms was proposed to solve the debt risk of local government,and improve the management of government debts in full aperture of new ideas.This paper combined with the practical problems of domestic and foreign research results and economic scholars of China's local government debt,from the macro economic effects of economic growth and inflation in two aspects of in-depth study of local government debt,local government debt risk analysis in our country from the perspective of the debt risk assessment of each province debt risk,and proposed to strengthen local government debt the local government debt management,promote development,prevent and resolve the debt risk policy recommendations.The full text is divided into six chapters:Chapter one is an introduction.This section introduces the background and significance of the paper,explains the concepts involved and the category definition,summarizes the research thinking,method,points out possible deficiencies of innovation and research.Chapter two is a literature review and theoretical basis of the study.This section sorts out domestic and foreign scholars on local government debt,economic growth,inflation and debt risk and the results of these studies are reviewed and then describes the theoretical basis of the study.Although many theoretical study on local government debt,this part of the research content selects one representative theory as a basis for research.Chapter three shows development course and status of China's local government debt to understand China different period of local government debt like form,and scale,aspects of dynamic changes process;then analysis China local government debt produced reasons,found China local government debt in different;last,on China local government debt status for statistics description.The purpose of the description and analysis are to summarize and refine features of local government debt in China to study the economic effects of local government debt in China,provide objective basis and an important reference for local government debt management.The fourth chapter is empirical research on the economic effect of local government debt in China.On economic growth effect of local government debts,this section by constructing PVAR(2)model of local government debt re-examines the relationship of regional economic growth or the inflation effect on local government debt,using 27 Provinces of panel data during 2004-2013.Empirical research on the fifth chapter is the local government debt risks.This part first introduces conduction mechanism of local government debt,and description if China local government debt risk occur;then using statistics data on China regions local government debt risk situation for analysis;last,using factor analysis,and three time standard poor of method to assess government debt risk.The sixth chapter concludes and makes policy recommendations.Firstly,extracts and summarizes the results of this research,and to promote the development of local government debt and debt risk prevention policy recommendations.Main conclusions of this study are:1.By reviewing development of local government debt in China,you can see the emergence and development of local government and is closely related to the processes and stages of economic development in China,is the inevitable outcome of China's economic development;reasonable debt of local governments is an important aspect of local Government to perform its functions,to speed up infrastructure construction,to promote regional economic growth.However,due to the incompleteness of China's fiscal decentralization system,tax reform is not in place,budget and institutional and financial regulations are not perfect,so that local government debt in China have been expanding,could trigger a debt risk of local government.2.The effects of economic growth on local government debt,based on empirical study found that relationship between regional economic growth and local government debt affects each other.In terms of economic influence of local government debts,debts of local governments have more significant role in promoting regional economic growth,however,with the increase of debt,the effect of local government debts on economic growth gradually weakens and even have a negative impact.In terms of regional impact of local government debt on economic growth,empirical results also found that regional economic growth have more positive effects on local government debt.This shows that local government debt in China play its role in promoting economic growth,but also to control the debt and prevent excessive expansion to adversely affect the economic development of local government debt.3.The effect of local government debt on inflation,through empirical study we found that local government debt in China has a significant impact on inflation,there is not linear relationship between local government debt and inflation,but inverted "u" shape.With the expansion of local government debt,inflation will increase when inflation reaches a certain level,local governments would take steps to intervene in order to keep their reputation,inhibiting further growth.Therefore,at the time of the issuance of debt,full of local government debt has impact on inflation,preventing stimulating inflation from the expansion of debt.4.On the debt risk,by constructing a risk assessment model,we can see that our 30 moderate risk areas are found in most provinces,not risky and riskfree region,explains the current local government debt risk is controllable as a whole.However,Ningxia,Qinghai,Hainan,Shanxi and Heilongjiang regions are at high risk,the possibility of regional debt risk exists.Therefore,in order to take timely measures to strengthen the management of local government debts,against the risk of regional debt and expand.While,empirical analysis also can see local government debt risk and area economic development level exists,Guangdong,and Jiangsu,and Beijing and Shanghai which have although larger government debt scale,but local economic development level higher,local government integrates strong finance and possibilities small of debt risk;and Ningxia,and Qinghai,and Hainan,and Shanxi and Heilongjiang,claim debt capacity insufficient,debt burden is heavy,debt risk of possibilities is big.This shows that regional local government revenue is an effective method of preventing debt risk of local government.5.Theoretical analysis and empirical study,we can see that legitimate local government debt scale and structure is conducive to regional economic growth with great significance.From this point of view,we should encourage local governments to borrow money or debt but too much debt liabilities will result in inflation,raise the risk,from this point of view,we should control the local government debt,and limit excessive expansion of local government debt.Therefore,we should summarize the experience,standing at the height of the macro-economic management system,and form a comprehensive specification and management of local government debt.Therefore,China should sum up the experience and lessons of debt management since the reform and opening up,and design the system at the height of macroeconomic management,and conduct comprehensive regulation and management of local government debt.Therefore,this paper puts forward policy recommendations to promote the development of local government debt and prevent and resolve debt risks from two aspects of the overall design and specific measures.On the rigorous scientific research of economic effects and debt risks of local government debt in China,we reference research methods of the scholars at home and abroad.In theory,we integrated the theory and methods of national economy and public finance,combining theoretical and empirical research.Empirical research need to collect relevant data,and then study the idea of building models,drawing conclusions.Methods using PVAR model recognize relations between local government debt and economic growth and through the Panel model this paper research relations between local government debt and inflation;local government debt risk assessment based on the factor analysis,with three times standard deviation method.At present,China is in the process of a new type of industrialization and the rapid development of the city,city public utilities and infrastructure construction requires a lot of financial support,the local government through debt financing to make up the financial gap.But with the local government debt continues to expand the scale of debt risk gradually accumulate,causing economic effects of economic scholars of China's local government debt and debt risk in a rich discussion and research,on the basis of existing research indepth investigation process of China's local government debt development,reveals the problems and seek government debt the reason of the interactive relationship between the local government debt and economic growth,to verify the effect of inflation on local government debt is the inverted U type relationship,this to reveal China's local government debt and the objective laws of development has important theoretical and practical significance to study the influence of local government debt to the regional economic development;at the same time,this paper analyzes the provinces debt risk,the risk to guard against and defuse local government debt.The sustainability of local government debt,thereby enhancing the stability,coordination and sustainability of local economic development,has important practical significance.