Research On The Risk Of Local Government Debt From A Perspective Of Utility

In 2015,a large number of local government debts came due. In order to prevent the risk of local government debt, the central government allowed local governments to issue local government bonds. But the issuance did not go well. Now the local government bonds resolving the risk of local government debt is uncertain. Some people think local bonds is likely to further increase the debt risk, and this shows at present the problem of Chinese local government debt is still serious. Therefore, this paper analyzes the causes of local government debt risk from a perspective of utility, then builds local government debt risk control mode, and provides some suggestions to resolve the risk of local government debt.Firstly, make retrospective studies about local government debt to find the shortage and confirm the research emphasis in this paper.Then this paper defines the related concept definition and introduces the related core theory to provide theoretical guidance for research.Secondly, this paper constructs the utility function of local government, and through the analysis of the utility function, explore the cause of local government debt risk. Research shows that the local government utility is a increasing function of the local government debt, and local governments pursuing their own effectiveness maximization is the root cause of the formation of local government debt risk, and the competition between local governments aggravates the accumulation of local government debt risk.Thirdly, this paper puts forward the control model of local government debt risk. By constructing and analyzing the utility function of local government control mode, this paper checks the effectiveness of the control mode and analyzes the influence factors of the control mechanism of local government debt risk. Through the game equilibrium of local government we know competition to contain local government debt risk has a positive effect in control mode.Finally, according to the research conclusion this paper puts forward the advice about controlling the local government debt risk. In this paper we believe that the central government can keep the local government debt risk within the scope of the controllable level with the central government constructing advisable supervision mechanism of local government debt risk and local government strengthening debt risk management.