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Spending preferences of local officials with off-budget land revenues of Chinese cities

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  • Ding, Chengri
  • Niu, Yi
  • Lichtenberg, Erik

Abstract

The paper examines the spending preferences of local governments on land revenues by developing an indirect approach in which public sector outcomes are regressed with land revenues, the most dominant source for off-budget incomes. By doing so, we are able to overcome the issue of unavailable itemized spending data on land revenues. The behavioral foundation of leading local officials on land revenues is that they may be treated as discretionary funds that will be spent on projects that can benefit local officials' political advancements. Thus it is hypothesized that Chinese local officials intend to channel land revenues more toward growth-oriented infrastructure such as urban roads, more toward image projects such as public squares and open space, and more toward projects that help to boost public impression of local economic success on which cadre evaluation weighs heavily. We test those hypotheses using a panel data of Chinese prefecture cities from 1999 to 2006. Econometric estimates confirm those hypotheses.

Suggested Citation

  • Ding, Chengri & Niu, Yi & Lichtenberg, Erik, 2014. "Spending preferences of local officials with off-budget land revenues of Chinese cities," China Economic Review, Elsevier, vol. 31(C), pages 265-276.
  • Handle: RePEc:eee:chieco:v:31:y:2014:i:c:p:265-276
    DOI: 10.1016/j.chieco.2014.10.001
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    References listed on IDEAS

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    Cited by:

    1. Que, Wei & Zhang, Yabin & Schulze, Günther, 2019. "Is public spending behavior important for Chinese official promotion? Evidence from city-level," China Economic Review, Elsevier, vol. 54(C), pages 403-417.
    2. Wang, Yuan & Hui, Eddie Chi-man, 2017. "Are local governments maximizing land revenue? Evidence from China," China Economic Review, Elsevier, vol. 43(C), pages 196-215.
    3. Wanfu Jin & Chunshan Zhou & Lijia Luo, 2018. "Impact of Land Input on Economic Growth at Different Stages of Development in Chinese Cities and Regions," Sustainability, MDPI, Open Access Journal, vol. 10(8), pages 1-19, August.
    4. Ding, Chengri & Niu, Yi, 2019. "Market size, competition, and firm productivity for manufacturing in China," Regional Science and Urban Economics, Elsevier, vol. 74(C), pages 81-98.
    5. Xie, Hualin & Wang, Wei & Yang, Zihui & Choi, Yongrok, 2016. "Measuring the sustainable performance of industrial land utilization in major industrial zones of China," Technological Forecasting and Social Change, Elsevier, vol. 112(C), pages 207-219.

    More about this item

    Keywords

    Land revenue; Off-budget; Expenditure behavior; Local officials; China;

    JEL classification:

    • H10 - Public Economics - - Structure and Scope of Government - - - General
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy

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