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Fiscal Behavior Volatility, Economic Growth, and Urban-Rural Income Disparity

Author

Listed:
  • Wang Yufeng

    (School of International Trade and Economics, University of International Business and Economics, Beijing100029, China)

  • Liu Shulin

    (School of International Trade and Economics, University of International Business and Economics, Beijing100029, China)

Abstract

Fiscal behavior of local governments has great volatility in China, especially in the period of economic transition. This paper estimates fiscal behavior volatility by making regression analysis of panel data of 30 provinces from 1994 to 2011. Then we establish a dynamic panel model to study the direct and indirect impact of the fiscal behavior volatility on the urban-rural income disparity. Empirical results show that urban-rural income disparity has nonlinear relationship with economic growth and financial development and that fiscal behavior volatility expands the urban-rural income disparity directly and indirectly. The larger fiscal behavior volatility comes greater urban-rural income disparity. We also find that the urban-rural income disparity is further enlarged through dual economic structure. If one of the economic growth and financial development is fixed, the other one has an inverted U-shaped relationship with urban-rural income disparity.

Suggested Citation

  • Wang Yufeng & Liu Shulin, 2014. "Fiscal Behavior Volatility, Economic Growth, and Urban-Rural Income Disparity," Journal of Systems Science and Information, De Gruyter, vol. 2(3), pages 217-225, June.
    • Handle: RePEc:bpj:jossai:v:2:y:2014:i:3:p:217-225:n:3
    DOI: 10.1515/JSSI-2014-0217
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    References listed on IDEAS

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    1. Bozhechkova, A.V. (Божечкова, А.В.) & Sinelnikova-Muryleva, Elena Vladimirovna (Синельникова-Мурылева, Елена Владимировна), 2016. "The Impact of Higher Interest Rates on Loans to the Economic Growth of the Russian Federation in the Current Environment [Влияние Высоких Процентных Ставок По Заимствованиям На Экономический Рост Российской Федерации В Текущих Условиях]," Working Papers 21310, Russian Presidential Academy of National Economy and Public Administration.

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