Research On The Impact Of Local Government Bond Issuance Scale On Economic Growth

The relationship between public debt and economic growth has been discussed for a long time,but there is still no final conclusion.In recent decades,the outbreak of sovereign debt crisis can be described as endless.For example,the Russian debt crisis in 1998 and the European debt crisis in 2009,each time it will bring a heavy damage to the developing country and the world economy.Since the reform of the financial system,especially after the financial crisis in 2008,the continuous expansion of the scale of local government debt in China has become a prominent problem in the rapid and healthy development of China's economy.At present,China is in a period of tackling key issues in transforming its development mode,optimizing its economic structure,and transforming its growth momentum.Various types of risks are intertwined and the downward pressure on the economy is increasing.In order to properly handle the relationship between local government debt and economic growth,and to achieve the goal of serving economic growth,it is extremely urgent to study both.This paper validates the economic effects of the scale of local government bond issuance based on panel data of government bonds issued by 99 cities at or above the prefecture level in China from 2009 to 2018.This paper finds that local government debt issuance to finance local infrastructure construction and other expenditures can significantly promote local economic growth,and there are significant regional differences in this economic effect.Further,this paper believes that land prices are the cause of this regional difference and a key intermediary variable for local government bond issuance to affect economic growth.Compared with the central and western regions,the eastern region has a more complete land market and higher land demand.The increase in the price of residential land is supported by a strong market.Therefore,the local government 's debt reserve land will cause a significant reduction in land supply in the region.Increasing residential land prices,higher residential land prices have formed a higher financing capacity for local governments,and residential land prices have a house price linkage effect to drive consumption and drive the development of related industries.The two combine into one to promote local economic growth.The central and western regions have problems such as economic backwardness,imperfect infrastructure,low capital stock,and low land marketization.The local government's debt issuance to promote economic growth is more dependent on direct infrastructure investment attracts private capital to achieve.After dividing all cities into first-,second-,and third-tier cities,the conclusions obtained once again verify the importance of residential land prices.The issue of local government bonds in first-tier and second-tier cities can significantly promote economic growth,and the intermediary effect of residential land prices is also significant;Issuing bonds by local governments in thirdtier cities cannot promote economic growth.Finally,this paper also uses the spatial econometric model to confirm that the local government debt issuance has a spatial spillover effect.