Export Shocks,Counter-cyclical Adjustment and Debt Issuance Behavior of Local Governments
Using a sample of Chinese prefecture-level cities from 2007 to 2019,this paper examines how local governments make counter-cyclical adjustments through debt expansion in response to negative export shocks,employing changes in global demand as a source of exogeneous variation in the construction of a shift-share Ⅳ.Prior to the implementation of the new 2015 budget law,local government financing vehicles(LGFVs)significantly increased debt issuance in the face of a slowdown in local exports.This led to an increase in infrastructure investment and partly offset the negative impact of declining external demand,at the cost of increased financial risk.After the implementation of the new budget law,LGFV debt was subject to strict regulation,so it ceased to respond to shocks in external demand.Meanwhile,due to quota constraints,the local explicit debt did not respond either.The impact of export shocks on local economic growth became stronger,while financial risks were also partially eased.This study contributes to the understanding of the role of local government debt in macroeconomic regulation and provides policy references for a sound public debt management system and a macroeconomic governance system.
local government debtexport shockscounter-cyclical adjustmenteconomic stability
万方数据
维普
