Exploring the drivers of local government budget coordination: A random forest regression analysis

Yinan He, Chao Wu and Yuanyuan Fan

International Review of Economics & Finance, 2024, vol. 93, issue PA, 1104-1113

Abstract: Budget coordination is a critical issue of local government coordinative governance. Existing literature emphasizes its importance but does not give in-depth empirical research. The random forest regression model was used to probe into the drivers of budget coordination for 2815 local government projects in China. Based on the purity of the split nodes of the decision tree, the three most important factors for achieving the goal of local government budget coordination are identified: discretion, decision-making level and fund scale. The partial dependence graphs visually illustrate the differentiated and nonlinear marginal effects of various explanatory variables on the response variable.

Keywords: Budget coordination; Local government; Drivers; Random forest regression (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:93:y:2024:i:pa:p:1104-1113

DOI: 10.1016/j.iref.2024.04.004

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