| Currently,China’s economy is transforming from a stage of high-speed growth to a stage of high-quality growth.Meanwhile,the report of the 19 th CPC National Congress points out that one of China’s top tasks is to prevent and defuse major risks.Effective prevention and control of local government debt risk is the key element of our work.As a continuation of the debt financing behavior of local government and relevant departments,the scale of local government implicit debt is much larger than explicit debt.Compared with the explicit debt,the implicit debt of local government has the features of uncertain and contingent,which has become a major hidden risk affecting China’s economic and social development.Scientific management of debt financing behavior of local government in China and resolving implicit debt risk have become the top priority of current work.Specifically,this paper carries out research from the following four aspects: the definition and scale statistics of local government implicit debt,the formation mechanism analysis of local government implicit debt,the identification of local government implicit debt risk and the prevention and control strategies of local government implicit debt risk.Firstly,the development process of local government implicit debt is introduced.Then,the forms of local government implicit debt are classified from the perspective of investment end,financing end and financing subject,and the relationship between the three perspectives is summarized.Then,the scale of local government implicit debt based on three statistical caliber is estimates from investment demand side,financing supply side and financing subject,and the advantages and disadvantages of the three statistical caliber is summarized.Then,the investment demand side of the statistical caliber is selected to measure the scale of China’s local government implicit debt,and the current scale of China’s implicit debt is described and demonstrated.Then,this paper analyzes the formation mechanism of local government implicit debt.Firstly,the characteristics of local government implicit debt are described from the perspective of policy effect of transfer payment system and the driving role of economic growth.Then,the classic Ramsey model and generation overlapping model are used to build the three-sector model of "household,enterprise and government",and the variable of local government implicit debt is taken into consideration.By solving the model,the mechanism of transfer payment and economic growth on the scale of local government implicit debt is obtained.Then,the econometric model is constructed to make an empirical analysis on the mechanism among transfer payment,economic growth and local government implicit debt.The threshold regression method is used to determine the implementation intensity of the optimal transfer payment policy under the economic development target of different regions,and the scale of local government implicit debt under the transfer payment policy is the optimal debt scale under the "safety line".Then,from the perspective of input-output efficiency of local government implicit debt,the risk identification and prevention of local government implicit debt are studied.This part mainly identifies the implicit debt risk of local government from the perspective of investment and financing "efficiency line" of local government implicit debt,and controls the implicit debt risk of local government in the process.Firstly,DEA efficiency evaluation model is used to calculate the input-output efficiency of local government implicit debt in all provinces and cities of China.Then,the relationship between the risk of local government implicit debt and the input-output efficiency of local government implicit debt is verified.Finally,from the perspective of "efficiency line",the relationship between the scale of local government implicit debt and the efficiency of local government investment and financing is studied.Meanwhile,the optimal scale of local government implicit debt under the "efficiency line" is calculated,which helps to control the risk of local government implicit debt from the perspective of improving the input-output efficiency of local government implicit debt.Then,this paper forecasts the default probability risk of local government implicit debt.From the perspective of macro risk prediction,the possible default risk of local government implicit debt is predicted in advance,so as to carry out effective supervision on the areas that may generate default risk of local government implicit debt.The default rate of local government implicit debt in each province of China from 2021 to 2023 are forecasted by using the classical KMV model.The regions with high default rate of local government implicit debt should be put more emphasis on monitoring,so as to prevent the excessive accumulation of local government implicit debt risk.Finally,this paper establishes the reward and punishment contract design of "local government-investment and financing platform" under the theory of "principal-agent".From the micro point of view,this part mainly uses the "principal-agent" theory to establish the reward and punishment contract between local government and investment and financing platform,which helps to encourage the local investment and financing platform to operate better and establish the beforehand prevention system of local government implicit debt.By establishing the principal-agent contract model of rewards and punishments between local government and local investment and financing platform,the optimal effort level of the local investment and financing platform and the contract parameters established by the local government-"revenue sharing contract parameters" and "risk sharing contract parameters" are calculated,so as to make the local government and the local investment and financing platform can achieve mutually beneficial cooperation.Specifically,the main conclusions of this paper are as follows:Firstly,transfer payment and economic growth play a significant role in the scale of local government implicit debt.In the whole country,the transfer payment and economic growth have significant positive effect on the scale of local government implicit debt.Meanwhile,transfer payment will reduce the target driving effect of economic growth on the scale of local government implicit debt,and economic growth will also reduce the policy driving effect of transfer payment on local government implicit debt.In the eastern regions,the economic growth target will significantly promote the scale of local government implicit debt,while transfer payment has no significant impact on local government implicit debt,but the increase of transfer payment will reduce the target driving effect of economic growth on local government implicit debt.The mechanism between the economic growth of transfer payment and the implicit debt of local government in central regions is as the same as that in the whole country.In the western regions,the increase of transfer payment will lead to a significant expansion of the scale of local government implicit debt,while the target factor of economic growth has no obvious driving effect on the scale of local government implicit debt,but economic growth will reduce the policy driving effect of transfer payment on the scale of implicit debt.Meanwhile,at different levels of economic growth,there is a GDP threshold effect on the impact of transfer payment on the scale of local government implicit debt,that is,there is a U-shaped non-linear relationship between transfer payment and local government implicit debt.The transfer payment policy implemented at this GDP level just makes the scale of local government implicit debt reach the lowest value at the inflection point.Moreover,the sub-regional threshold regression results show that the GDP threshold effect values of the eastern regions,the central regions and the western regions decrease successively,that is,compared with the eastern regions,the threshold effect value of the GDP-influenced transfer payment in the central regions and the western regions on the scale of local government implicit debt is lower.Secondly,the measurement of the risk of local government implicit debt should be focused on the analysis from the perspective of investment and financing efficiency of local government implicit debt,and there is an optimal debt balance point for the scale of local government implicit debt.Specifically,there is a significant negative correlation between the risk of local government implicit debt and the investment and financing efficiency of local government implicit debt.The more(less)efficient of usage of local government implicit debt,the lower(higher)the risk of local government implicit debt will be.From the perspective of “efficiency line”,there is an inverted U-shaped relationship between the scale of local government implicit debt and the local government investment and financing efficiency.That is,there is an optimal scale of local government implicit debt,which makes the investment and financing efficiency of local government implicit debt reach the optimal level.The optimal implicit debt scale of local government is the optimal debt scale from the perspective of “efficiency line”.On the whole,the balance point of local government implicit debt shows a decreasing trend from eastern regions,central regions to western regions.Thirdly,in the next three years,the default risk of local government implicit debts in each province are different,and the overall debt default risk shows a decreasing trend year by year.The KMV model based on the local government implicit debt risk prediction results show that there is still a certain degree of default probability of local government implicit debt in some provinces of China in 2021-2022,but in 2023,the default rate of local government implicit debt gradually flattens out.Specifically,in the case of debt repayment guarantee of 30%,50% and70% of the comprehensive financial resources of local government,the implicit debt default risks of local government in various provinces in 2021-2023 are different.In 2021,Tianjin,Liaoning,Jilin,Fujian,Hubei,Sichuan and Shaanxi all have high risk of implicit debt default when 30% of local government comprehensive financial resources are used to repay implicit debt.Shanxi and Hunan have a certain degree of default risk when local government financial resources are used to repay implicit debt with a guarantee ratio of 50%.In 2022,Shanxi,Jiangxi,Hunan,Guizhou and Gansu have a high implicit default risk under the guarantee rate of 30 percent.By 2023,the default probability of implicit debt risk of local government in all provinces of China tends to zero.Fourthly,by establishing the principal-agent contract model of "local governmentinvestment and financing platform",the cooperation between local government and investment and financing platform can be effectively promoted,that is,the implicit debt risk of local government can be prevented from the perspective of cooperative game on a micro level.The optimal decision variables of local government can be solved by game analysis of the behaviors of local government and investment and financing platforms,that is,the optimal cooperation contract parameters(including revenue sharing contract and risk sharing contract)set by local government and the optimal decision variables of local investment and financing platforms,that is,the optimal efforts of local investment and financing platforms.This decision variable can make the profits of local government and local investment and financing platform reach pareto optimum at the same time.Therefore,the reward and punishment contract between local government and investment and financing platform established based on the principal-agent theory can strengthen the effective supervision of local government over local investment and financing platform from the perspective of micro-advance prevention,which helps to prevent the implicit debt risk of local government,and achieve a mutually beneficial cooperation between local government and local investment and financing platform.Based on the research conclusions above,this paper gives the following policy recommendations:(1)According to the economic growth level of different regions,the implementation intensity of transfer payment in different regions should be established,so that the scale of local government implicit debt can reach the lowest value under the “safety line”,which can help to prevent the excessive accumulation of local government implicit debt scale.(2)From the perspective of investment and financing efficiency of local government implicit debt,the balance point of local government implicit debt scale under the perspective of“efficiency line” should be established,and the risk of local government implicit debt can be reduced from the perspective of risk control.(3)The early warning and monitoring system for preventing implicit local government debt risks should be established.By increasing the monitoring intensity of provinces with high probability of implicit debt default,the guarantee ratio of local government available financial resources to implicit debt can be adjusted.The provinces with high probability of default should be governed,and the implicit debt risks of local government should be prevented from accumulating again in a new form from the perspective of risk pre-warning.(4)The cooperation contracts between local government and local investment and financing platforms should be established,including revenue sharing contract as an incentive contract and risk sharing contract as a punitive contract.By setting reasonable contractual cooperation parameters,senior executives of local financing platforms are encouraged from the perspective of risk prevention in advance,so as to promote the good operation of local investment and financing platforms. |
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