How The Policy Impact Affects The Investment Impulse Of Local Government

Most of the existing literatures focus on the economic behavior of local governments by using the theory of tax incentives and promotion incentives.The land-transferring behavior of local governments has a strong indication of their economic preferences,thus the investment Impulse resulting from fiscal incentives and promotion incentives of local government is likely to be reflected in their land-transferring behavior.However,the local government is not able to use the land-transferring tool to maximize their utilization unconditionally?While facing the political constraints imposed by the central government,local governments' maximization is constraint by economic factors in regional level.In this paper,we treat the central "four trillion" investment stimulus plan in 2009 and the excessive production removing plan in 2013 as the most significant political constraints,and the demand factors in regional level as the most significant economic constraints faced by local governments in the past decade.Based on the micro-data of industrial land-transferring from 2007 to 2016,we use the multiple differential model to test the influence of policy impact on local governments' investment impulse,and their relationship with local demand factors.This paper is divided into six chapters,mainly to answer the following three questions.First,is the local government's investment impulse affected by the central government's core economic policy significantly?Second,if the answer is positive,what's the pattern of this influernce?What do regional demand factors have to do with it?Thirdly,does this effect differentiates in sub-samples?The main conclusions of the paper are as follows:In the first place,local governments will take more positive actions responding central expansionary economic policies,and tend to be inactive when facing tightening policies.Therefore,the local economic cycle will expanses fast and tightens slowly.Secondly,regional demand factors significantly affect the investment impulses of local governments under different policy impacts.When the macroeconomic policy is in the expansion cycle,only those areas with strong demands are able to realize their investment impulses;and in the tightening cycle,the local governments in the areas with weak demands will show stronger investment impulse.Last but not least,the difference of the influence by central core economic policy caused by grades and location of cities appears only in the expansion cycle,but not in the tightening cycle,showing a "be good differently and be bad similarly" pattern.During the expansion period of macroeconomic policy,the investment impulse of local governments in the three or four-tier cities and cities in coastal provinces is more strongly influenced by regional demand factors than in one or two-tier cities and non-coastal cities.The innovations of this paper are mainly embodied in two aspects.The first innovation comes from our research perspective.The existing research usually assumes that the local government can control the land-transfer variables unconditionally,such as amounts and prices.In that case,they will neglect that local governments also faces certain constraints,especially economic constraints.Based on this perspective,this paper provide empirical evidence of the relationship between local governments' investment impulse,political constraints and economic constraints,which is the main innovation of this paper.The second innovation of this paper comes from the data we use.This paper uses the nationwide land-transferring micro-level data.Compared to the macro-level land data used by most of the existing literature,the data we use take advantages in both quantitative and structural way.While avoiding conceptual mistakes,our data makes the research conclusions more precise.