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Debt authority and intentional overstatement of budgetary deficit: evidence from Chinese Provinces

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Listed:
  • Zhiyong An

    (Fannie Mae)

  • Yilin Hou

    (Syracuse University)

Abstract

This paper takes advantage of China’s 2011 “debt decentralization” reform to identify its causal impact on the budgetary deficit of Chinese subnational governments (SNGs) by employing a difference-in-differences approach. We use data on Chinese SNGs from 2009 to 2014 to implement the analysis. We find that debt decentralization can help contain the intentional overstatement of budgetary deficit by SNGs. We argue that our finding carries wider policy implications even beyond China.

Suggested Citation

  • Zhiyong An & Yilin Hou, 2020. "Debt authority and intentional overstatement of budgetary deficit: evidence from Chinese Provinces," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 27(2), pages 461-477, April.
    • Handle: RePEc:kap:itaxpf:v:27:y:2020:i:2:d:10.1007_s10797-019-09561-w
    DOI: 10.1007/s10797-019-09561-w
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    More about this item

    Keywords

    Budgeting; Deficits; Debt; Fiscal decentralization; Intergovernmental relation;
    All these keywords.

    JEL classification:

    • G - Financial Economics
    • H - Public Economics
    • P - Political Economy and Comparative Economic Systems

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