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Transfer Payments Uncertainty,Government Investment And Economic Growth

Posted on:2015-03-16Degree:MasterType:Thesis
Country:ChinaCandidate:L Y WuFull Text:PDF
GTID:2269330425993985Subject:Public Finance
Abstract/Summary:PDF Full Text Request
With the growing economic disparity in China, the intention of central govement to use transfer payments to promoting economic development in the region and coordinating regional balance has become increasingly evident. In fact, many studies find that transfer payments to promote regional economic growth is not obvious, in the long term even negative.To explain this phenomenon, this paper draw the studies of the impact of foreign aid uncertainty on investment and growth in developing countries, constructed a theoretical framework to analyze the impact of transfer on regional economic growth from the angle of uncertainty,in the Chinese style decentralized system. Transfer payment system with its own defects and their correlation with macroeconomic policies, has not only the existence of its own uncertainty, but also reflected the policy uncertainty. Transfer payments as an endogenous variables of the decision-making process of government, not even the main source of government investment, will have an impact on investment decisions. Meanwhile, Keynes economic theory suggests that,when making future investment decisions, economic agents will have reservations because of uncertainty, come from incomplete information. So when government faced with the revenue uncertainty from the transfer, it’s goal of maintaining a balanced budget is full of variables, which will make it tend to maintain a conservative fund balance and reduce the investment. Therefore, this paper considers the transfer payment uncertainty will affect long-term economic growth through government investment. Besides, Chinese-style fiscal decentralization and the " promotion tournament " institutional context makes our local government investment and economic growth stronger correlated, and also exacerbated the impact of uncertainty on investment and growth in the medium-term.Use Chinese Provincial Panel Data and Acemoglu channel identification method, measurement results show that the uncertainty of transfer payments on the one hand,along with the traditional uncertainty theory, have long-term negative impact on economic growth, and to some extent by government investment to convey. On the other hand, because of the Chinese-style decentralization and the " promotion tournament " institutional contexts, such negative impact also exists in the medium-term, and mainly through government investment to achieve.
Keywords/Search Tags:Transfer payment, Uncertainty, Economic growth, Fiscal decentralization
PDF Full Text Request
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