Debt authority and intentional overstatement of budgetary deficit: evidence from Chinese Provinces

Zhiyong An and Yilin Hou ()
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Yilin Hou: Syracuse University

International Tax and Public Finance, 2020, vol. 27, issue 2, No 9, 477 pages

Abstract: Abstract This paper takes advantage of China’s 2011 “debt decentralization” reform to identify its causal impact on the budgetary deficit of Chinese subnational governments (SNGs) by employing a difference-in-differences approach. We use data on Chinese SNGs from 2009 to 2014 to implement the analysis. We find that debt decentralization can help contain the intentional overstatement of budgetary deficit by SNGs. We argue that our finding carries wider policy implications even beyond China.

Keywords: Budgeting; Deficits; Debt; Fiscal decentralization; Intergovernmental relation (search for similar items in EconPapers)
JEL-codes: G H P (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1007/s10797-019-09561-w

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