Study On The Impact Of Fiscal Vertical Imbalance On High-Quality Economic Development

China’s economy has shifted from a stage of rapid growth to a stage of high-quality development.A scientific financial system is not only an important pillar for modernizing the country’s governance system and capacity,but also the institutional foundation for promoting high-quality economic development.In 1994,the reform of the tax sharing system shifted financial power up to the central government and administrative power down to local governments.The resulting vertical fiscal imbalance has left local governments in a long-term dilemma of revenue and expenditure governance,affecting their ability to govern the economy and society,then having a profound impact on high-quality economic development.Analyzing the impact of fiscal vertical imbalances on high-quality economic development is of great significance for deepening financial system reform,releasing institutional dividends,and promoting high-quality economic development.This article uses the provincial panel data of 30 provinces and cities from 2008 to2020 to measure and analyze the current situation of financial vertical imbalances and high-quality economic development.The high-quality economic development is based on the five development concepts of "innovation,coordination,green,openness,and sharing" to construct an evaluation index system,and is measured using entropy method.Then,on the basis of theoretical analysis,the two-way fixed effect model and intermediary effect model are used to empirically test the impact of fiscal vertical imbalances on high-quality economic development,as well as the intermediary effect of financial development and marketization processes in the impact of fiscal vertical imbalances on high-quality economic development.The research findings are as follows: First,the overall degree of China’s fiscal vertical imbalance is high,with a small range of changes.Secondly,the overall level of high-quality economic development in China has shown a slow upward trend,with the level of high-quality economic development in the eastern region significantly higher than that in the central and western regions.Thirdly,the benchmark regression analysis results show that fiscal vertical imbalances have a significant inhibitory effect on high-quality economic development.Fourth,the results of a multi-dimensional empirical analysis show that fiscal vertical imbalances have a significant inhibitory effect on the four dimensions of innovation,coordination,openness,and sharing,while they have no significant impact on the green dimension.Fifth,the intermediary effect analysis results show that both financial development and marketization process play an intermediary effect in the impact of fiscal vertical imbalances on high-quality economic development,that is,fiscal vertical imbalances have a inhibitory effect on high-quality economic development by inhibiting financial development and impeding the marketization process.Finally,based on the conclusions of the study,policy recommendations are proposed: First,adjust the financial income distribution relationship between the central and local governments to increase local financial revenue.The second is to reasonably define the powers and expenditure responsibilities between central and local governments.Third,vigorously support the development of financial institutions.Fourth,clear the boundary between the government and the market,and promote the process of marketization.Fifth,establish and implement scientific standards for assessing government performance.