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Quality & Quantity

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05.05.2018

The welfare effects of fiscal decentralization: a simple model and evidence from China

verfasst von: Liangliang Liu, Donghong Ding, Jun He

Erschienen in: Quality & Quantity | Ausgabe 1/2019

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Abstract

This study extends the model of three levels of government to two levels, namely, the central government and local government, and uses the Hamilton function method to explore the dynamic relationship between fiscal decentralization and social welfare level. The study uses numerical simulation, results of which reveal that fiscal decentralization and social welfare display an inverse U-shaped relationship. The study also uses China’s panel data to perform an empirical investigation. Our findings demonstrate empirical results that verify the correctness of the theoretical results. This study also analyzes the regional differences in the relationship between fiscal decentralization and social welfare and demonstrates that fiscal decentralization and social welfare have an inverse U-shaped relationship in the eastern, central, and western areas of China, but they still present regional differences. Finally, policies and recommendations are proposed.

Vorheriger Artikel Patterns and evolution of consumer debt: evidence from latent transition models

Nächster Artikel Semantic differential for the twenty-first century: scale relevance and uncertainty entering the semantic space

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Following Gong and Zou (2002), the explanation of the benefits of decentralization runs in terms of tailoring the supply of public goods to the tastes of citizens and suggesting they enter the utility function.

The east area is constituted by 11 regions, including the Beijing, Tianjin, Hebei, Liaoning, Shanghai, Jiangsu, Zhejiang, Fujian, Shandong, Guangdong, and Hainan. The east area is well known and has experienced the most rapid economic growth in China and its GDP output is around half of China’s total (Hu and Wang 2006). The central area consists of 9 regions that are all inland provinces: Shanxi, Inner Mongolia, Jilin, Heilongjiang, Anhui, Jiangxi, Henan, Hubei, and Hunan. This area is a home base for farming. The west area consists of Guangxi, Chongqing, Sichuan, Guizhou, Yunnan, Shaanxi, Gansu, Qinghai, Ningxia, and Xinjiang. Compared to the other two areas, this area is the least developed area in China.

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Titel: The welfare effects of fiscal decentralization: a simple model and evidence from China
verfasst von: Liangliang Liu
Donghong Ding
Jun He
Publikationsdatum: 05.05.2018
Verlag: Springer Netherlands
Erschienen in: Quality & Quantity / Ausgabe 1/2019
Print ISSN: 0033-5177
Elektronische ISSN: 1573-7845
DOI: https://doi.org/10.1007/s11135-018-0761-2

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