Essays on Chinese Fiscal Federalism and Regional Economic

This thesis consists of three chapters to answer following questions: (1) what is the relationship among prefecture-level governments' fiscal revenue, expenditure, gross regional product and inter-governmental transfers, and what fiscal incentives these fiscal arrangements generate. (2) What is the relationship between local governments' strength of fiscal incentives and regional economic performance? (3) Do strong fiscal incentives of local governments push them to engage in local protectionism due to inter-jurisdictional competition? (4) With the economic development, would resource curse exists in China prefectures?;The national fiscal system reform in China is important not only because it clarifies the central-provincial fiscal relations, but also because it links the fiscal system to regional economic development. To answer the first two questions, Chapter 2 examined two conventional types of fiscal incentives, and their estimated strength is used to study the effect of fiscal incentives on regional economic performance at the Chinese provincial level. The results show that the strength of fiscal incentives has a positive effect on regional per-capita gross domestic product growth.;Chapter 3 uses dynamic panel estimation methods with Chinese prefecture-level dataset to answer whether a local government with strong fiscal incentives engage in local protectionism. We focus on the role of fiscal incentives because local governments with high levels of fiscal autonomy might be more likely to engage in local protectionism. The empirical results show no evidence that prefecture-level governments with strong fiscal incentives in China engage in local protectionism.;Chapter 4 also focuses on local economic growth. But instead of addressing issues related to fiscal federalism, it examines whether China's prefectures are subject to the socalled resource curse. We apply spatial techniques to examine the effects of coal rent shocks on economic growth in panel data on prefecture-level administrations in China. The results show no evidence of a resource curse in terms of the direct effects on economic growth. However, there is some evidence of positive indirect effects on growth as well as positive direct and indirect impact on coal investments.