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Long-Run Fiscal Multiplier for Autonomous Prefectures in China

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  • Yingxin Shi

    (Department of Economics & Management, Dalian Nationalities University)

  • Mototsugu Fukushige

    (Graduate School of Economics, Osaka University)

Abstract

We overcome the problems of data availability and investigate the fiscal multipliers in autonomous prefectures in China. We first estimate the long-run elasticity of gross regional production with respect to fiscal expenditure in autonomous prefectures, using autoregressive distributed lag models. The estimated long-run elasticity is much less than unity, however, and the estimated fiscal multipliers for prefectures are between 0.61 and 4.93, with an average of 1.93. These results indicate that additional fiscal expenditure is still effective in increasing local income and promoting economic growth for most of the autonomous prefectures.

Suggested Citation

  • Yingxin Shi & Mototsugu Fukushige, 2013. "Long-Run Fiscal Multiplier for Autonomous Prefectures in China," Discussion Papers in Economics and Business 13-10, Osaka University, Graduate School of Economics.
    • Handle: RePEc:osk:wpaper:1310
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    1. Li, Rong & Zhou, Yijiang, 2021. "Estimating local fiscal multipliers using political connections," China Economic Review, Elsevier, vol. 66(C).

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    More about this item

    Keywords

    Fiscal Multiplier; Autonomous Prefecture; China; autoregressive distributed lag model;
    All these keywords.

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures

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