Research On The Influences Of Fiscal Decentralization To Local Government Revenue And Expenditure Behavior

In the Decision of CPC Central Committee on Several Important Issues of Comprehensively Deepening Reform passed by the Third Plenum of 18 th CPC Central Committee, public finance was given special status as “foundation and an important pillar of the state of governance”, financial functions were located from the height of an unprecedented historical, indicating the fiscal reform and research are important and urgent. In recent decades, fiscal decentralization reform is a fundamental characteristic of China’s financial reform. Positive and negative influence of fiscal decentralization reforms have produced has become one of the criteria to judge the results of fiscal reform. This paper aims to study how fiscal decentralization influence the local government revenue and expenditure behaviors.Fiscal decentralization explained the rationality and necessity of the existence of local government, with the aim of decentralization is to achieve optimal allocation of resources, to maximize social welfare, become institutional factors of economic and social development. Around the world, both in developed and developing countries, fiscal decentralization is an important part of financial system, and fiscal decentralization trend more and more obvious, fiscal decentralization reform has become an important economic field study. In China, the study on fiscal decentralization reform has been ongoing, especially since the 1994 tax reform, but also set off a study boom of fiscal decentralization reform. With the fiscal decentralization system has improved steadily, the central gives local governments some certain tax rights and expenses of responsibility, and allows local governments decide size and structure of budget expenditures on themselves. The central government’s devolution of power, leading to local governments become stakeholders having independent status, seeking to maximize their own interests under certain constraints. Rights and responsibilities of local government is gradually increased, resulting in a complex and changing behaviors.The paper described the backdrop and importance, and reviewed the literature about the current research at home and abroad on the status of fiscal decentralization literature review at first,then based on the theory of fiscal decentralization and fiscal decentralization reforms outlined on our country, the paper analyzed our local fiscal expenditure and income of the current situation, and inferred the basic description of fiscal decentralization influencing expenditure and revenue behavior of local government, and through panel data Model examine the impact of China’s 31 provinces about decentralization of expenditure to local fiscal expenditure behavior and revenue decentralization to local revenue behavior. Finally, according to the situation analysis and the results of empirical testing, combined with China’s national conditions and put forward some suggestions to improve fiscal decentralization, optimize local government revenue and expenditure behavior,such as establishing regional differences in fiscal decentralization, further improving the level of spending is divided, paying attention to the importance of decentralization "double-edged sword" effect, mproving the supervision and management mechanism, and strengthening public participation and so on.