Local information and the stabilization role of local government
Evidence from a natural experiment in China
Bibliographic Data
| ID | 21352829 |
|---|---|
| Authors | Junxue Jia (China Financial Policy Research Center, School of Finance Renmin University of China Haidian Beijing China), Rong Li (0000-0002-7743-5526, China Financial Policy Research Center, School of Finance Renmin University of China Haidian Beijing China, corresponding author), Chang Liu (0000-0002-1198-6990, Department of Economics University of Rochester Rochester New York USA), Jing Ning (0000-0001-9533-6700, Institute of Finance and Economics Central University of Finance and Economics Haidian Beijing China) |
| Year | 2024 |
| Volume | 64 |
| Issue | 4 |
| Pages | 1265-1286 |
| Publication date | 2024-09-01 |
| Peer Reviewed | Yes |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | Journal of Regional Science (JOURNAL) |
| Journal identifiers | ISSN: 0022-4146 • E-ISSN: 1467-9787 |
| Publisher | Wiley (PUBLISHER • GB) |
| DOI | 10.1111/jors.12700 |
| OpenAlex | W4393232965 |
| Language | EN |
| Citations received | 1 |
| References cited | 34 |
Oates, (1972) argues that local governments cannot use conventional policies to stabilize economies, due to fiscal spillovers and beggar‐thy‐neighbor policies. Hayek's theory implies it is efficient for a central government to devolve decision‐making authority to local governments that have informational advantages. This paper tests the different theoretical implications by examining a natural experiment caused by the income‐tax‐sharing reform in China. Our analysis reveals that local government size does have a stabilization effect, but vertical fiscal imbalance (VFI) substantially weakens this stabilizing effect; lack of local information is the key factor leading to this influence of VFI
Central government · China · Economic system · Economics · Government (linguistics) · Key (lock) · Local government · Macroeconomics · Natural experiment · Political science · Public economics · Public finance · Fiscal Policies and Political Economy · Fiscal Policy and Economic Growth · Local Government Finance and Decentralization · Public Administration
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| Unique citing works | 1 |
|---|---|
| Citations per year | 1 |
| Citation span | 2025 - 2025 (1) |
| Citation velocity | recent |
| Highly cited | No |
| Citation types | Neutral: 1 |