Impact of Fiscal Decentralization on Economic Development:County-Level Evidence from China's Fiscal Contracting Period
This paper analyzes the impact of fiscal decentralization on economic development in transitional China from 1985 to 1991.We use county-level data and construct an instrumental variable strategy that exploits the feature that provincial governments gave favorable treatment to counties that received subsidies.Our findings suggest that fiscal decentralization causally promoted per capita industrial output,but had no impact on per capita agricultural output.Further investigation reveals that fiscal decentralization boosted per capita industrial output of the township-and-village enterprises(TVEs)and accelerated the entry of foreign enterprises.However,this comes at the expense of weakening fiscal capacity by reducing macro tax burdens and undermining macroeconomic stability.
NETL
NSTL
万方数据
