Local Government Debt, a Time-Bomb for China’s Economy?

Authors

  • Zhou Ming Matt Northwest University, Xian, China
  • Wang Man Cang Northwest University, Xian, China
  • Ni Ming Ming Northwest University, Xian, China

DOI:

https://doi.org/10.58886/jfi.v14i2.2283

Abstract

China's national audit office reported huge debt accumulated at all levels of local governments in recent years. This paper aims to explain the factors contributing to the local government debt in China with empirical study on the economic development data. The relationship of government debt and economic ratios is examined with the auto regressive linear equation constructed between the local government debt, fiscal income, GDP growth rate and CPI. Granger causality test is performed to find the granger cause of local government debt from previous year’s data. From the analysis, the risk of local government debt is evaluated from the global settings. Policy implications and suggestions are presented at the end.

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Published

2015-12-31

How to Cite

Matt, Zhou Ming, Wang Man Cang, and Ni Ming Ming. 2015. “Local Government Debt, a Time-Bomb for China’s Economy?”. Journal of Finance Issues 14 (2):64-74. https://doi.org/10.58886/jfi.v14i2.2283.

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Section

Original Article