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Provincial Public Expenditure in China: A Tale of Profligacy

Author

Listed:
  • Jean-Louis COMBES

    () (Centre d'Etudes et de Recherches sur le Développement International(CERDI))

  • Mary-Françoise RENARD

    () (Centre d'Etudes et de Recherches sur le Développement International(CERDI))

  • Sampawende Jules TAPSOBA

    () (Centre d'Etudes et de Recherches sur le Développement International(CERDI))

Abstract

This paper examines the cyclicality of provincial expenditure in China during the period 1978-2013. We assess whether provincial expenditure has been pro-cyclical using panel data for our analysis. Profligacy is found to be a regular feature of provincial fiscal policy. This profligacy occurs both in good and bad times and has markedly increased since 1994 with the increased autonomy of provinces. We further find that the profligacy bias is mitigated when financial constraints are relaxed, the remaining political life of the governor is long, government efficiency is strong, corruption incidence is low, and governments are large.

Suggested Citation

  • Jean-Louis COMBES & Mary-Françoise RENARD & Sampawende Jules TAPSOBA, 2015. "Provincial Public Expenditure in China: A Tale of Profligacy," Working Papers 201524, CERDI.
  • Handle: RePEc:cdi:wpaper:1733
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    Keywords

    China; Fiscal cyclicality; Regional growth;

    JEL classification:

    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • H60 - Public Economics - - National Budget, Deficit, and Debt - - - General
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy

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