Will Vertical Fiscal Imbalances Affect Economic Fluctuations: Evidence from China's Provinces since the Reform of Tax-sharing System

LIN Chun; SUN Ying-jie

Volume 34 Issue 3

May 2021

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LIN Chun, SUN Ying-jie. Will Vertical Fiscal Imbalances Affect Economic Fluctuations: Evidence from China's Provinces since the Reform of Tax-sharing System[J]. Journal of Guangdong University of Finance & Economics, 2019, 34(3): 67-77.

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LIN Chun, SUN Ying-jie. Will Vertical Fiscal Imbalances Affect Economic Fluctuations: Evidence from China's Provinces since the Reform of Tax-sharing System[J]. Journal of Guangdong University of Finance & Economics, 2019, 34(3): 67-77.

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Will Vertical Fiscal Imbalances Affect Economic Fluctuations: Evidence from China's Provinces since the Reform of Tax-sharing System

School of Economics, Liaoning University, Shenyang 110036, China

Received Date: 2018-11-03
Available Online: 2021-05-27
Publish Date: 2019-05-28

Abstract

Abstract

Fiscal policy is an important means of national macro-control. However, the vertical fiscal imbalance caused by the tax-sharing reform has weakened the regulatory role of fiscal policy. Based on the panel data of 29 provinces (municipalities and autonomous regions) from 1994 to 2017 in China, this paper uses the dynamic panel model to empirically analyze the relationship between vertical fiscal imbalance and economic fluctuations.The results show that vertical fiscal imbalance is an important factor leading to China's economic fluctuations; it also positively promotes economic fluctuations through investment shocks, technological shocks and money supply shocks. There are temporal heterogeneity and environmental heterogeneity in the influence of vertical fiscal imbalance on economic fluctuation; the change cycle of vertical fiscal imbalance precedes the change cycle of economic fluctuation and presents a certain cycle synchronization.
- vertical fiscal imbalance,
- economic fluctuation,
- investment shock,
- technological shock,
- money supply shock,
- fiscal decentralization,
- fiscal imbalance

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References(33)

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