| Government debt has been a hot issue for a long time and its influence on economic growth is always the primary consideration of countries.In China,too much attention has been paid to the national level debt rather than provincial debt.Actually,since the economic slowdown caused by financial crisis in 2003,the central government implemented 4-trillion stimulus package among which about 1 trillion yuan of the fund is provided by the central government and the rest part of the fund has to be raised by local government,which make it necessary for local government to finance by debt.The rapidly expanding local government debt size calls for the further research upon the impacts of provincial government debt on local economic growth.Both central and local governments need the research results to guide the government debt management and to promote economic growth.In this thesis,Keynesian effective demand theory,Harrod-Domar model and Neo-classical economic growth theory are applied to analyze the influence mechanism of local government debt on economic growth.Besides,in the process of data processing,threshold effect is founded and hence,empirical tests are conducted to get the threshold value and regression results.In addition,panel regression analysis is conducted by region due to huge disparity in economic development situation among different regions in China.This thesis conducts empirical study based on data of 30 provinces over time period of six years from 2010 to 2015.The first chapter is introduction,which includes research background,objectives and research methodologies.In the second chapter,I review the previous studies about local government debt’s definition and formation,and go through the literature review of relationship between local government debt and economic growth.In chapter 3,the influence mechanism of government debt on growth is analyzed.Chapter 4 is mainly about the establishment of the econometrics model and the data collection.Chapter 5 conducts empirical study including several tests and regression analysis.The last chapter is conclusion,indicating that within reasonable range,local government debt can stimulate economic growth and that the driving effects of local debt vary with debt ratio.The main conclusions of this thesis are generalized as follows:(1)Before analyzing model,descriptive analysis and correlation test are conducted.According to the descriptive analysis,we can find that the average growth rate of these provinces is 12.86%and the average debt ratio is about 41.13%.Through the correlation analysis,we find that on a 5%significance level,economic growth is positively related to provincial government debt scale and openness degree,weakly negatively related to urbanization rate.Also,there is no significant relationship between population growth and economic growth.(2)Through Hausman test,we can find it is appropriate to use fixed-effect regression.It is also concluded that on a 1%significance level,provincial government debt can promote economic growth.Through threshold panel regression,we know threshold effect exists in debt’s influence on economic growth and the threshold value of the debt ratio is 1.1745.To be specific,below the threshold value,debt size is positively related to economic growth and above the threshold level,although the coefficient of debt’s impacts on economic growth is still positive,it is apparently smaller than that of the low debt-ratio provinces.(3)In the regression on samples from 30 provinces,the coefficient of debt’s impacts on the economy is 0.0181,representing the average level around the whole nation.Nonetheless,after conducting regression respectively on samples divided into groups according to location,we can-find that the coefficient of debt in eastern areas is much larger than national averagelevel.Meanwhile,debt coefficient of middle areas is slightly larger than national level but smaller than coefficient of eastern areas.Last but not the least,debt coefficient of western areas is even below the national average level,indicating that excessive government debt is not beneficial to economic growth. |
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