Measurement And Cause Analysis Of China's Vertical Fiscal Imbalance

In the grand blueprint for the construction of state system in China at present,finance was given a hitherto unknown historical mission,it becomes the foundation and an important pillar of national governance,inter government fiscal balance plays a crucial role.Economic circles generally think,vertical fiscal imbalance situation exists in our country(vertical fiscal imbalance,the following referred to as VFI),but how much degree is China's vertical fiscal imbalance? What are the reasons for vertical fiscal imbalance? Further research is urgently needed.By comparing the change trend of financial revenue and expenditure structure and gap between central government and local government: there is vertical fiscal imbalance between the central and local government in China;the vertical fiscal on China's provincial area unbalance measure showed that: there is vertical fiscal balance phenomenon of different degrees in provinces of China.The paper analyzes the characteristics and causes of the vertical fiscal imbalance measurement results in different provinces.This paper begins with the introduction of theoretical significance,practical value of domestic,international literature review,research ideas and methods,innovation and shortcomings.According to the domestic and foreign literature,the paper reviews the concepts and measurement methods of vertical fiscal imbalance,respectively using Luc Eyraud and Lusine Lusinyan(2013)and Jiang Qing's(2007)vertical fiscal imbalance measures to measure China's 2004-2014 provincial vertical fiscal imbalance,and compare and analyzed the measurement results.In view of the existing literature is simply a measure of vertical fiscal imbalance degree,few research results of further analysis,the paper does characteristic analysis of the results of VFI,the study found that China's vertical fiscal imbalance has area characteristic difference.The vertical fiscal imbalance of eastern coastal area is relatively low,the vertical fiscal imbalance of the backward areas in the Midwest is high.In addition,there are characteristics of city level differences in the degree of vertical fiscal imbalance,VFI of high level city is relatively low,VFI of low level city is relatively high.Aiming at the causes of China's vertical fiscal imbalance analysis,this article discusses from three aspects: unreasonable division of powers between governments,lack of self-financing capacity of local government,lag of transfer payment system,in order to investigate whether these 3 aspects have close relationship with the Ministry of finance longitudinal balance,and how much the influence degree of them,the paper studies by constructing econometric analysis mode.The empirical results show that: all of the three aspects have effect on the formation of VFI significantly,the lack of financial self-sufficiency ability of local government has greatest impact on VFI coefficient,the unreasonable government property right division takes the second place,transfer payment system reform lag influence factors has minimum effect.The destination of the measure of VFI and probe of the causes is to prevent the outbreak of the possible negative impacts.This paper summaries the countermeasures and suggestions from three aspects to prevent the vertical fiscal imbalance negative effects.First of all,realize the clarity of government powers and expenditure responsibilities;secondly,gradually adjust the fiscal income distribution relationship in the financial system;thirdly,further improve the transfer payment system.Although the empirical results of the analysis of the causes shows that the imperfect transfer payment system has the minimal impact on the formation of VFI,the transfer payment is an important means to alleviate regional fiscal imbalance,it should play an important role in alleviating China's vertical fiscal imbalance.However,through the analysis of the measure of VFI results,it shows that the current transfer payment policy has not obvious effect on VFI alleviation.The reason is that the current transfer payment system has great defects.So,the future transfer payment system of our country should be further adjusted,to change the trend of regional financial gap expansion,and to correct vertical fiscal imbalance phenomenon,in order to achieve the goal:equalization of regional basic public services.Specifically,we should comprehensively optimize the transfer payment structure,and gradually cancel the matching requirements of local funds,and further standardize the special transfer payment system,in order to reduce the degree of China's vertical financial imbalance.