The Impact Of Fiscal Deficit On Housing Price

Since the tax-sharing system reform in 1994,the local governments have completely entered the era of fiscal deficit,and the scale of fiscal deficit has expanded year by year.Faced with a very uneven fiscal revenue and expenditure structure,local governments have to find a new way to alleviate the shortage of funds.At the same time,the local government’s land income grows year by year,and gradually formed a "land finance" model,so we cannot help but think of whether the local government’s high deficits had a significant impact on land finance.Land income in the context of rising year by year,the price of commercial housing has been soaring,so we have questions: whether the high land income of local governments pushed up prices.The research of this paper is based on the theoretical logic that the local government fiscal deficit affects the land finance,thus affecting the house price.In order to verify the theoretical logic of this paper,this paper makes an empirical study on the panel data of each province from 2004 to 2013.The results show that the fiscal deficit of the local governments have a positive impact on land finance,land finance has a positive impact on housing prices and the fiscal deficit plays a positive and indirect effects on house prices through the land finance.Through the Sobel-Goodman test,we find that the mediating effect of land finance is significant;the degree of mediating effect is 53%.At the same time,in order to further study the regional differences of land financial mediating effect,this paper tests the eastern-central regions and western regions respectively.The results show that the financial mediating effect is still significant in eastern-central regions,and not significant in western regions.Through empirical research,we believe that the theoretical logic of this paper is established to a certain extent.In order to reduce the fiscal deficit,ease the local government’s dependence on land finance and thus control the rapid rise in house prices,this paper gives some policy suggestions from five aspects: perfecting the tax system,optimizing the financial revenue and expenditure structure,optimizing the land transfer system,perfecting the performance appraisal method and strengthening the market supervision.