Fiscal Decentralization,Transfer Payment System And Local Public Goods Supply

With the speed of economic growth slowing down, how to stimulate consumption effectively has become a problem that needed to be solved right now. However, due to the complete between local government for economic growth, a large amount of fiscal funds has been used for infrastructure construction such as road、highway and bridge, and the funds for public service seemed to be short, including but not limited to education、medication and health care. Under such circumstances, residents don’t have suitable excitation to do mass consumption; at the same time, the support between districts in basis public service is not equally distributed, which is harmful to the stable of our society. Because the divide of affair power between central government and local government is kind of blurry, along with the promotion system of local officers, local government is lack of motivation to provide enough basis local public goods and public service, bringing the effectiveness of local public department. Solving the problem of lack of local public goods is helpful for us to analysis our fiscal decentralization and find out its shortcomings, in order to make good improvements; is helpful for us to introspect our governance model, so we can implement a better governance model and performance assessment system; is helpful to ease the situation that residents don’t have enough public goods now and achieve the goal of local public service equalization.We set local public goods supply under fiscal decentralization as primary research object, using both theoretical analysis and empirical analysis, employing Chinese provincial panel data from 2003-2014. We construct an empirical model and using fixed effect and random effect to analysis the impact to local public goods supply by fiscal decentralization, including the impact to the differences in different districts. By doing this, we can get some conclusions and give some advice and discussions to improve local public goods supply. We find out that, after the reform of revenue sharing system, due to the mismatch of property right and powers of local government, adding with inadequate government incentive mode, fiscal decentralization system hinder the effective of local public goods supply, which is mainly about education、medication and city public service, and the existing of transform system improve this situation to a certain extent. In order to change this situation, we have to improve our fiscal decentralization system、transform system and governance mode.This article is organized as follows:chapter one put forward the topic that we will research in this article; chapter two is literature review, to sum up theories and opinions by former researchers; chapter three make a simple description of the history of Chinese fiscal decentralization and the situation of local public goods supply; chapter four is theoretical analysis, study the impact to local public goods supply by fiscal decentralization system and transform system in theoretical way; chapter five is empirical research, to find out the real impact of local public goods supply by fiscal decentralization and transform system in a quantitative way; chapter six is conclusion, to summarize the result of theoretical research and empirical research and give some advice to improve Chinese fiscal system.