In Search of Fiscal Interactions: A Spatial Analysis of Chinese Provincial Infrastructure Spending

Zheng, Xinye and Song, Feng and Yu, Yihua and Song, Shunfeng (2014): In Search of Fiscal Interactions: A Spatial Analysis of Chinese Provincial Infrastructure Spending. Forthcoming in: Review of Development Economics

Abstract

Using a dataset for 31 Chinese provinces from 1998 to 2006, this paper provides a spatial Durbin panel analysis to test for fiscal interactions among China's provinces in their public spending on infrastructure. We find significant positive interactions across Chinese provincial governments. Further analysis attempting to distinguish between the possible sources of such fiscal interactions reveals evidence of expenditure competition instead of yardstick competition.

• Item Type: MPRA Paper
• Language: English
• Keywords: Infrastructure expenditure, Fiscal interactions, Spatial Durbin panel model, Two-stage least squares
• Subjects: C - Mathematical and Quantitative Methods > C2 - Single Equation Models ; Single Variables > C23 - Panel Data Models ; Spatio-temporal Models; H - Public Economics > H5 - National Government Expenditures and Related Policies > H54 - Infrastructures ; Other Public Investment and Capital Stock; H - Public Economics > H7 - State and Local Government ; Intergovernmental Relations

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