Issuance of urban investment bonds and high-quality urban economic development

Liuzhen Zhang and Wunhong Su

Economic Analysis and Policy, 2025, vol. 85, issue C, 111-130

Abstract: High-quality economic development is a significant issue in China's new era, wherein an active government plays a crucial role in the rational allocation of public resources. This study examines the impact of urban investment bond issuance on the high-quality development of urban economies using panel data from Chinese cities. It further explores the specific mechanisms and regional heterogeneity of this impact. By clarifying the fundamental attributes and channels of influence of urban investment bonds, this study incorporates regional debt elements as a unique factor into the spatial Durbin model to investigate their specific spatial spillover effects, aiming to broaden and enrich economic growth theory. The findings reveal that urban investment bond issuance significantly promotes high-quality urban economic development and has a positive spatial spillover effect. The primary mechanisms include alleviating fiscal pressure, enhancing research and development expenditure, and increasing educational spending. Heterogeneity analysis indicates that the promotion effect of urban investment bonds on high-quality urban economic development is not significant in central and western cities. This study provides theoretical and practical insights into accurately understanding the relationship between government-issued urban investment bonds and high-quality economic development and aids different regions and cities in identifying their unique positions to implement tailored debt issuance strategies.

Keywords: Urban investment bonds; High-quality development; Spatial econometric model; Debt expansion (search for similar items in EconPapers)
JEL-codes: M41 O10 R12 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecanpo:v:85:y:2025:i:c:p:111-130

DOI: 10.1016/j.eap.2024.11.025

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