| As an important source of government income, government debt can help relief the capital shortage effectively. Government debt can be divided into central government debt and local government debt according to different government levels. In China, there are many kinds of local government debt, some of which are implicit and hard to calculate. The local urban investment bond is a main type of local government debt and has grown rapidly since 2009. On one hand, the urban investment bond can provide government with more capital for the social construction; on the other hand, the huge amount of government debt will increase the default risk of local government. In this context, we searched much information of local government debt and try to do some simple analysis. First, we will measure the local government debt risk through the statistical analysis. Second, we will use the empirical model to discuss how the local government debt affects the local economic growth.The statistical data shows that the debt’s growth varies obviously with region and government level and many governments are faced with high debt repayment burden. The eastern provinces issue much more debt than both middle and western provinces, which helps widen the economic disparity. Some governments with low fiscal income have difficulties in debt repayment and the huge increase of lower government debt will raise the whole default risk. The empirical results demonstrate that government debt has a negative effect on economy growth through the channel of depressing investment and technology improvement. |
