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Empirical Analysis and Spatial Distribution of Urban Fiscal Pressure in China

【Authors】
ZHU Jun, KOU Fangchao & SONG Chengxiao
【WorkUnit】
Nanjing University of Finance & Economics, 210023.
【Abstract】

In the 21st century, the problem of debt accumulation of local governments at all levels in China has become increasingly prominent. Taking the potential default probability as an index, this paper constructs a “fiscal pressure index” to discuss the characteristics of the spatial distribution of urban fiscal pressure. Based on the statistics of local government debt balance and macroeconomic data of 333 prefecture-level cities from 2014 to 2017, this paper calculates the key parameters of fiscal pressure index, and verifies its reliability by Monte Carlo simulation. The findings are as follows, firstly, there is obvious regional heterogeneity regarding local fiscal pressure. For the distribution, there is a funnel-shaped pattern, which shows the conditions are basically the same in North and South, but different between East and West. The northern and southwestern regions are under heavy fiscal pressure. The Eastern and western regions are in good fiscal condition, but the fiscal pressure in the eastern region is obviously higher than that in the western region. Secondly, at present, there is no absolute fiscal pressure concentration area; both high-pressure areas and low-pressure areas have advantages and disadvantages. Finally, in the period of 2014-2017, the overall fiscal pressure in the northern and southwestern regions shows a downward trend, but not notably. The fiscal pressure of some cities in Northeast China is increasing. This paper provides a new perspective of the lower-level government debts and identification of debt heterogeneity between cities.

 

JEL:H63, R59

【KeyWords】
Fiscal Pressure, Default Probability, Monte Carlo Simulation, Regional Heterogeneity