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In Search of Fiscal Interactions: A Spatial Analysis of Chinese Provincial Infrastructure Spending

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  • Xinye Zheng
  • Feng Song
  • Yihua Yu
  • Shunfeng Song

Abstract

Using a dataset for 31 Chinese provinces from 1998 to 2006, this paper provides a spatial Durbin panel analysis to test for fiscal interactions among China's provinces in their public spending on infrastructure. We find significant positive interactions across Chinese provincial governments. Further analysis attempting to distinguish between the possible sources of such fiscal interactions reveals evidence of expenditure competition instead of yardstick competition.

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  • Xinye Zheng & Feng Song & Yihua Yu & Shunfeng Song, 2015. "In Search of Fiscal Interactions: A Spatial Analysis of Chinese Provincial Infrastructure Spending," Review of Development Economics, Wiley Blackwell, vol. 19(4), pages 860-876, November.
    • Handle: RePEc:bla:rdevec:v:19:y:2015:i:4:p:860-876
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    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations

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