In this paper,we construct an“as-if”DID model on the basis of the 2002“Income Tax Sharing System”reform and evaluate the changes in local fiscal pressure based on an exogenous shock that redefines the tax sharing ...In this paper,we construct an“as-if”DID model on the basis of the 2002“Income Tax Sharing System”reform and evaluate the changes in local fiscal pressure based on an exogenous shock that redefines the tax sharing rules between the central government and local governments.By using the DMSP/OLS satellite data at the city-level,we empirically examine the impact of fiscal pressure on the economic growth.We find that fiscal pressure significantly increase the satellite lighting.Furthermore,we obtain the findings as follows.Firstly,the incentive effects of fiscal pressure effects are less profound in cities that receive considerable intergovernmental transfers from high levels of governments.Secondly,the local governments are more likely to help the growth of real estate industry,which can reciprocally bring them considerable sales taxation.However,this homogenized growth pattern might be detrimental for economic diversification and finally enhance the risk of economical fluctuation.Finally,the fiscal pressure created by the reform restricts the extent to which jurisdictions compete with each other.However,the tax competition still exists because local governments are able to lower the tax rate once they gain enough revenues from land-sales.This paper provides a new explanation for China’s high-speed growth in addition to expenditure decentralization or administration decentralization.It also offers extra evidence for exploring the growth incentives of local government within the framework of China’s decentralization.展开更多
文摘In this paper,we construct an“as-if”DID model on the basis of the 2002“Income Tax Sharing System”reform and evaluate the changes in local fiscal pressure based on an exogenous shock that redefines the tax sharing rules between the central government and local governments.By using the DMSP/OLS satellite data at the city-level,we empirically examine the impact of fiscal pressure on the economic growth.We find that fiscal pressure significantly increase the satellite lighting.Furthermore,we obtain the findings as follows.Firstly,the incentive effects of fiscal pressure effects are less profound in cities that receive considerable intergovernmental transfers from high levels of governments.Secondly,the local governments are more likely to help the growth of real estate industry,which can reciprocally bring them considerable sales taxation.However,this homogenized growth pattern might be detrimental for economic diversification and finally enhance the risk of economical fluctuation.Finally,the fiscal pressure created by the reform restricts the extent to which jurisdictions compete with each other.However,the tax competition still exists because local governments are able to lower the tax rate once they gain enough revenues from land-sales.This paper provides a new explanation for China’s high-speed growth in addition to expenditure decentralization or administration decentralization.It also offers extra evidence for exploring the growth incentives of local government within the framework of China’s decentralization.
