Provincial Public Expenditure in China: A Tale of Profligacy

Jean-Louis Combes (1) , Mary-Françoise Renard (1) , Sampawende Jules Tapsoba (2)

1 CERDI - Centre d'Études et de Recherches sur le Développement International
2 FMI - Fonds monétaire international

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.

Mots clés: China; Fiscal cyclicality; regional growth

Domaines: Economies et finances

Jean-Louis Combes, Mary-Françoise Renard, Sampawende Jules Tapsoba. Provincial Public Expenditure in China: A Tale of Profligacy. 2015. ⟨halshs-01217332⟩