When Can Competitions Reinforce the Discipline of Governments
Lou Guoqiang
(Institute for Advanced Research, Shanghai University of Finance and Economics)
Abstract:The role of competition in disciplining government is contingent. When regional governments compete in tax and public service simultaneously, the relationship between the multiple competitions depends on the endowment of the economy. Even in symmetric competitions, when capital endowment is abundant, the tax competition can increase the incentive of government to supply more public goods, however when the endowment is scare, more intensive tax competition may induce more public resource into extravagant official consumption. Using the provincial level panel data in China, the empirical evidences support the above proposition.
Key Words:Regional Competitions; Political Governance; Corruption
JEL Classification:H11, H41, K42
The Influence of Local Governments on China’s Macroeconomic Stability
Li Meng and Shen Kunrong
(Nanjing University)
Abstract:China’s economic fluctuation may be caused by many factors. We decompose the source of China's volatility to department and region shocks. Results show that 30% of the reason due to the impact of local government behavior. For the character of local government shock，this paper explores the cause from corruption, and expands the research. By using the fixed effects model and instrumental variables methods，we find the corruption impacts the local behavior at the level 5% significant，while the tax incentive and political incentive is not significant.
Key Words:Corruption; Local Government Shocks; Macroeconomic Stability
JEL Classification:D73， E32， H72
Credit Constraints, Government Consumption and Real Business Cycle in China
Chen Xiaoguanga and Zhang Yulinb
(a. China Financial Policy Research Center, Renmin University of China; b. Industrial and Commercial Bank of China)
Abstract:Since initiation of the reform and opening-up policy, the business cycle in China has been characterized with certain stylized facts different from those both in the developed countries and developing countries and emerging economies. Firstly, China’s household consumption fluctuates more than its output.