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Fiscal Expenditure And Industrial Land Price In China: Theory And Evidence

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  • Pi‐Han Tsai
  • Chien‐Yu Huang
  • Tsun‐Feng Chiang

Abstract

This paper aims to discover the mechanism behind the positive correlation between local fiscal expenditure and industrial land price in China, a stylized fact discovered by bivariate and regression analyses. The model shows that if the positive externality of government expenditure on growth is sufficiently high, the local government has an incentive to increase public spending in exchange for the reduced demand for industrial land by charging a higher markup and driving up the industrial land price. Therefore, we observe a positive correlation between the local fiscal expenditure and industrial land price. (JEL D42, H72, R51)

Suggested Citation

  • Pi‐Han Tsai & Chien‐Yu Huang & Tsun‐Feng Chiang, 2020. "Fiscal Expenditure And Industrial Land Price In China: Theory And Evidence," Contemporary Economic Policy, Western Economic Association International, vol. 38(4), pages 593-606, October.
    • Handle: RePEc:bla:coecpo:v:38:y:2020:i:4:p:593-606
    DOI: 10.1111/coep.12493
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    Cited by:

    1. Jingjing Chen & Han Feng & Hong Zhou, 2022. "Local industrial policy and productivity: Evidence from China," Contemporary Economic Policy, Western Economic Association International, vol. 40(1), pages 138-161, January.

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    More about this item

    JEL classification:

    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • R51 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Finance in Urban and Rural Economies

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