Analysis Of Local Government Debt Risk Fluctuation Characteristics

After the 2008 financial crisis,China's economy was in the doldrums.In order to boost the economy,the central government has continuously introduced economic stimulus policies.Driven by The 4 trillion yuan fiscal stimulus,local government debt has expanded rapidly.The local government debt risk based on platform loan has become the focus of attention.Fitch downgraded China's sovereign debt,which is just a reflection of domestic and foreign anxiety.Under the current financial system,the higher government has the responsibility to protect and rescue the lower government debt.Local government debt risk may endanger the effective operation of the central government.The lesson of China's debt problem is the European debt crisis,which has caused Europe's economy to plummet.From the revision of the budget law to the county fiscal consolidation plan,reflects the central government has paid attention to the local government debt problem.In this context,it is of great significance to study the characteristics of local government debt risk fluctuations and to specify the macro and idiosyncratic shocks to local government debt fluctuations for the establishment of local government debt risk prevention and prevention mechanisms.This paper uses the monthly data of urban investment bond spreads in 31 provinces from January 2010 to December 2017 to build a hierarchical dynamic factor model.The empirical study includes: By decomposing the volatility of local government debt risk into common shocks and idiosyncratic shocks,we estimate country ? regional and provincial factors and describe the basic characteristics of local government debt risk fluctuations.Variance decomposition analyses the driving factors of local government debt risk fluctuation.The regression model explains the relationship between provincial characteristics and the degree of influence of different levels of factors.Causality test explores the fluctuation path of local government debt risk between regions and provinces.The results show that:(1)The dynamic characteristics of local government debt riskfluctuation in different provinces show a high degree of convergence.(2)The average contribution rate of national risk factors to local government debt risk fluctuation is as high as 70%,which is the main driving force.(3)Economic development,financial development and debt risk volatility affect the impact of country and provincial factors on local government debt risk volatility.(4)The fluctuation path of regional local government debt risk and provincial local government debt risk in China is mainly spread from other regions to economically developed regions or regional economic centers.The risk fluctuation of local government debt in remote areas shows strong independence.