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Diminishing Target-based GDP Manipulation: Evidence from China

Author

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  • Gong, Binlei
  • Shen, Yuhui
  • Chen, Shuai

Abstract

GDP manipulation is a prevalent form of hidden action, often arising from the principal-agent problem. Utilizing Bunching Estimation within an innovative ratio form approach, this study identifies and quantifies target-based GDP manipulation. Our empirical analysis offers evidence of such manipulation at the prefectural level in China to meet predetermined targets. However, China’s target-based GDP manipulation is diminishing over time. Furthermore, the findings suggest that reducing the weight of economic performance in local government assessments and adopting the soft target-setting restrictions have served as effective strategies to significantly mitigate China’s GDP manipulation in recent years.

Suggested Citation

  • Gong, Binlei & Shen, Yuhui & Chen, Shuai, 2025. "Diminishing Target-based GDP Manipulation: Evidence from China," Journal of Public Economics, Elsevier, vol. 244(C).
    • Handle: RePEc:eee:pubeco:v:244:y:2025:i:c:s0047272725000477
    DOI: 10.1016/j.jpubeco.2025.105349
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    More about this item

    Keywords

    Target-based GDP manipulation; Bunching Estimation; Ratio form approach; Prefectural-level GDP reporting; Manipulation mitigation;
    All these keywords.

    JEL classification:

    • P2 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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