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Education expenditure in China: potential strategic behavior among regional governments

Yanqing Jiang

Journal of Chinese Economic and Business Studies, 2015, vol. 13, issue 3, 233-246

Abstract: In this study, we examine whether significant strategic interaction exists among Chinese provincial governments in determining the levels of their expenditures on education. The presence of such spatial interaction may be either due to spatial spillovers or due to spatial resource flows between provinces. We derive our basic regression specification based on the theoretical models in the literature. By applying a panel data generalized method of moments (GMM) method, we show that under a ‘smooth-distance-decay’ assumption in constructing the weighting scheme for the relevance of interaction between two provinces, our regression results provide evidence that supports the claim that there exists significant inter-provincial strategic interaction in public expenditure for education among the Chinese provinces.

Date: 2015
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DOI: 10.1080/14765284.2015.1021113

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