Central-local government fiscal relations and cyclicality of public spending: evidence from China
Jing Xing () and
Clemens Fuest
Additional contact information
Jing Xing: Antai College of Economics and Management, Shanghai Jiao Tong University
International Tax and Public Finance, 2018, vol. 25, issue 4, No 5, 946-980
Abstract:
Abstract In this study, we analyze how fiscal decentralization affects the cyclicality of government spending. We focus on China, which experienced fiscal decentralization during 1979–1993 and then partly centralized its revenue with the 1994 fiscal reform. By employing both time series and province-level panel data, we show that Chinese provincial and total government spending was strongly procyclical during the decentralization period before the reform, but both became significantly less procyclical with respect to nationwide output fluctuations after the reform. We suggest several channels through which the procyclicality of subnational government spending in decentralized fiscal federations could be restrained. We further find that less procyclical provincial government spending is associated with smaller output volatility.
Keywords: Fiscal decentralization; Cyclicality; Government spending; Intergovernmental transfers (search for similar items in EconPapers)
JEL-codes: H71 H72 H77 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)
Downloads: (external link)
http://link.springer.com/10.1007/s10797-017-9478-8 Abstract (text/html)
Access to full text is restricted to subscribers.
Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:kap:itaxpf:v:25:y:2018:i:4:d:10.1007_s10797-017-9478-8
Ordering information: This journal article can be ordered from
http://www.springer. ... ce/journal/10797/PS2
DOI: 10.1007/s10797-017-9478-8
Access Statistics for this article
International Tax and Public Finance is currently edited by Ronald B. Davies and Kimberly Scharf
More articles in International Tax and Public Finance from Springer, International Institute of Public Finance Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().