Study on the Local Fiscal Sustainability in China from the Perspective of Equalization of Basic Public Services
Abstract
The objective of equalization of basic public services makes impact on the scale and dynamic adjustment of local government fiscal expenditure to a certain degree, and affects the local fiscal sustainability. Based on the theory of intertemporal budget balance, this paper analyzes the local fiscal sustainability and dynamic adjustment in China, and analyzes the changes of local fiscal expenditure and local fiscal sustainability when simulates the condition of equalization of basic services. The results show that most regions in China can achieve fiscal sustainability and there exists dynamic adjustment of fiscal expenditure, which means that the positive fiscal policy can continue. However, if the equalization of basic public services is taken as the requirement, the dynamic adjustment of fiscal expenditure will be limited, and the fiscal sustainability of some regions will change to some extent. It is suggested to adjust the transfer payment system by taking account of the factors as the permanent population and the supply cost of basic public services.
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DOI: http://dx.doi.org/10.18686/fm.v8i3.8978
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