Has Local Government Debt Promoted Economic Growth in developing countries? New evidence from a survey in China

Based on the panel smooth transition regression (PSTR) model, this paper empirically analyzes the relationship between Chinese local government’s bond financing and economic growth, with the quarterly panel data of bonds issued by local governments and their investment and financing platform compani...

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Published in:E3S web of conferences 2021-01, Vol.235, p.1014
Main Authors: Wu, Tao, Zhong, Peng, Wu, Lingyue
Format: Article
Language:English
Subjects:
Bond markets
Developing countries
Economic development
Economic growth
Economics
Financing
Government bonds
Government investment
LDCs
Local government
Regression analysis
Regression models
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Wu, Lingyue
description Based on the panel smooth transition regression (PSTR) model, this paper empirically analyzes the relationship between Chinese local government’s bond financing and economic growth, with the quarterly panel data of bonds issued by local governments and their investment and financing platform companies in the open market from 2008 to 2018 as samples. The research shows that there is a gradual non-linear relationship between local government bond market financing and economic growth in China. With the increase of the scale of local government bond market financing in China, the effect of bond market financing on economic growth will gradually decline and have a negative effect. This result means that for developing countries like China, it is not advisable to rely solely on government investment to drive economic growth.
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subjects Bond markets
Developing countries
Economic development
Economic growth
Economics
Financing
Government bonds
Government investment
LDCs
Local government
Regression analysis
Regression models
title Has Local Government Debt Promoted Economic Growth in developing countries? New evidence from a survey in China
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