On the Impact of Local Government Special Bonds on Private Investment

LONG Xiao-yan; ZHAO Quan-hou; LIANG Cheng-cheng

Volume 35 Issue 5

Apr. 2021

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LONG Xiao-yan, ZHAO Quan-hou, LIANG Cheng-cheng. On the Impact of Local Government Special Bonds on Private Investment[J]. Journal of Guangdong University of Finance & Economics, 2020, 35(5): 22-34+68.

Citation:

LONG Xiao-yan, ZHAO Quan-hou, LIANG Cheng-cheng. On the Impact of Local Government Special Bonds on Private Investment[J]. Journal of Guangdong University of Finance & Economics, 2020, 35(5): 22-34+68.

Citation:

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On the Impact of Local Government Special Bonds on Private Investment

1.
Chinese Academy of Fiscal Science, Beijing 100142
2.
Chinese Macroeconomic Research Academy, Beijing 100038, China

Received Date: 2020-05-18
Available Online: 2021-04-29
Publish Date: 2020-10-28

Abstract

Abstract

Based on the mathematical model of local government debt growth and private investment, this paper analyzed the impact of the issuance of local government special bond on private investment by using macro data at the provincial level. The results show that the local government debt in general would inhibit private investment, but after considering the impact of special debt policy, the special debt has no significant linear relationship with private investment; when the scale of special debt is lower than a certain level, it will stimulate private investment; when exceeding the optimal scale, it inhibits private investment. There is a similar nonlinear relationship between general bond and private investment, at an inflection point 22. 68%and 29. 95% respectively. In addition, special bonds and general bonds have heterogeneous effects on different types of private investment. At present, according to the local economic strength, the government should reasonably arrange the scale of local government special bonds and general bonds, reasonably reduce the difference in debt limit and balance between local government, and improve the macroeconomic policy environment to promote the level of private investment.
- government debt,
- local government debt,
- special bond,
- general bond,
- social investment,
- private investment

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References(33)

References

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