Fiscal Behavior Volatility, Economic Growth, and Urban-Rural Income Disparity

Wang Yufeng () and Liu Shulin ()
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Wang Yufeng: School of International Trade and Economics, University of International Business and Economics, Beijing100029, China
Liu Shulin: School of International Trade and Economics, University of International Business and Economics, Beijing100029, China

Journal of Systems Science and Information, 2014, vol. 2, issue 3, 217-225

Abstract: Fiscal behavior of local governments has great volatility in China, especially in the period of economic transition. This paper estimates fiscal behavior volatility by making regression analysis of panel data of 30 provinces from 1994 to 2011. Then we establish a dynamic panel model to study the direct and indirect impact of the fiscal behavior volatility on the urban-rural income disparity. Empirical results show that urban-rural income disparity has nonlinear relationship with economic growth and financial development and that fiscal behavior volatility expands the urban-rural income disparity directly and indirectly. The larger fiscal behavior volatility comes greater urban-rural income disparity. We also find that the urban-rural income disparity is further enlarged through dual economic structure. If one of the economic growth and financial development is fixed, the other one has an inverted U-shaped relationship with urban-rural income disparity.

Keywords: urban-rural income disparity; fiscal behavior volatility; economic growth; financial development; inverted U-shaped relationship (search for similar items in EconPapers)
Date: 2014
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Persistent link: https://EconPapers.repec.org/RePEc:bpj:jossai:v:2:y:2014:i:3:p:217-225:n:3

DOI: 10.1515/JSSI-2014-0217

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