Intergovernmental Fiscal Relationships in China: A Simple Model Based on the Nonsymmetric Nash Solution

Mototsugu Fukushige () and Yingxin Shi
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Yingxin Shi: Department of Economics & Management, Dalian Nationalities University

No 13-21, Discussion Papers in Economics and Business from Osaka University, Graduate School of Economics

Abstract: We propose a new empirical approach to analyzing fiscal decentralization and apply it to Chinese intergovernmental fiscal relationships between the central government and provincial governments. In calculating budgetary revenue and expenditure shares, we include extra budgetary revenue and expenditure. We find that although an increase in either income inequality or real per capita GDP lowers local governments f bargaining power within the budgetary system, local governments can offset this by obtaining more bargaining power over extra budgetary expenditures. Another finding is that although urbanization increases provincial governments f budgetary revenues, it also restricts the scope for further budgetary expenditure.

Keywords: nonsymmetric Nash bargaining; intergovernmental fiscal relationships; China (search for similar items in EconPapers)
JEL-codes: D72 H77 P35 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2013-08
New Economics Papers: this item is included in nep-pbe, nep-tra and nep-ure
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http://www2.econ.osaka-u.ac.jp/library/global/dp/1321.pdf (application/pdf)

Related works:
Journal Article: Intergovernmental fiscal relationship in China: a simple model based on the nonsymmetric Nash solution (2017)
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