Government Investment,Private Investment And Informal Financial Market

Government investment and.private investment are important forces to promote the steady growth of macro economy,and the relationship between them has always been an important subject in the field of macroeconomic research.In order to cope with the impact of the global financial crisis in 2008 and the downward pressure on the economy in recent years,government investment has been greatly strengthened,so that the relationship between government investment and private investment has become the focus of domestic academic research.Theoretically,government investment has both crowding in effect and crowding out effect on private investment.A large number of empirical literatures have found that there is a net crowding in effect of government investment on private investment,but these literatures seldom investigate the crowding out effect.According to the basic economic principle,due to the limitation of resources,there must be crowding out effect on private investment by government investment.The identification of crowding out effect and its conduction mechanism will help to evaluate the cost of government investment more accurately.Thus improving the quality of macroeconomic policy.Government investment obtains funds from the informal financial market,so it has an important impact on the informal financial market.Informal financial market is an important financing channel for private investment.As a result,government investment will further influence private investment through informal financial market.Based on this transmission mechanism,this paper indirectly identifies the crowding out effect of government investment on private investment by using provincial level data in mainland China.The main conclusions are as follows:firstly,the crowding out effect of government investment on private investment has a time-varying characteristic and tends to moderate.Secondly,government investment has a contractionary impact on the informal financial market through intermediary channels such as taxes and loans.And the role of loan channel is especially obvious during the period of "4 trillion".Thirdly,fiscal pressure will amplify the impact of government investment on the contraction of informal financial market,while the improvement of formal financial service level and the development of local small as well as medium-sized financial institutions can alleviate the impact of the contraction.The policy implications of the article are as follows:firstly,we should further promote the reform of financial marketization,vigorously optimize the financial development environment,guide the healthy development of informal financial market,and broaden the financing channels for private investment.Secondly,it is necessary to further transform the functions of the government,promote the transformation of the "economic growth" government to the "public service" government,create a greater space for the development of the private economy,and truly give play to the decisive role of the market in the allocation of resources.