Fiscal Decentralization,Political Cycle And The Supply Of Non-Economic Public Goods

The fiscal decentralization in China has the characteristic of political centralization and economic decentralization.Government taking economic construction as the central task,there has been an imbalance in the structure of local public expenditure,and the expenditure of non-economic public goods has been at low level with a fluctuation.This paper tries to study the influence of fiscal decentralization on the supply of non-economic public goods,in consideration of the importance of political factors in China,this paper puts political cycle into analysis to study the "administration-shift effect".The overall logic is that fiscal decentralization has an impact on the supply of non-economic public goods,but the process needs corresponding incentive mechanism.The goal of development taking economic construction as the central task leads to local governments ' strong willing to develop the economy.Due to non-economic public goods not stimulating economy as distinctly and directly as economic public goods,local governments don't attach importance to non-economic public goods.In addition to this,some local officials usually start large projects to create a good impression and beginning on they take office,meanwhile occupying the expenditure of non-economic public goods,which is the "administration-shift effect".This is how political cycle results in the fluctuation of expenditure of non-economic public goods.To demonstrate the point of view above,this paper makes empirical analyses in method of SYS GMM using provincial panel data from 1994 to 2013.The findings indicate that the fiscal decentralization measured by revenue and expenditure,together with political cycle,can definitely decrease the supply of non-economic public goods,and by establishing two variables of political cycle,this paper finds that not only the "administration-shift effect" does exist,but also the effect is significant in the administration-shift year and weakens in the second year.On this basis,three recommendations are given.First,financial authority and governmental authority are supposed to be divided reasonably between central government and local governments to bring the structure of financial revenue and expenditure into balance.Second,government should transfer its functions and establishes a diversified appraisal system.Third,to perfect the legal system and norm the budget management to reinforce supervision system and the restriction to the authority of government.