Trade-offs between Growth and Equity: A Study on China's Fiscal Decentralization Policy

Author: Qiao Baoyun
Publisher:
Publish Date: 2002-09-01
Features: The author of this book uses provincial data from China between 1985 and 1998 to establish a simultaneous equations model, estimating the relationship between economic growth rate, distributional equality, and fiscal decentralization. The model explores the behavior of social planners and local government behavior. The results show that fiscal decentralization plays an important role in promoting China's economic growth, but this impact is not linear. Specifically, China's current fiscal system may already be excessively decentralized. Fiscal decentralization exacerbates the unequal distribution of fiscal resources, and its impact is also significant. To some extent, China has achieved higher economic growth at the cost of sacrificing the equality of fiscal resource distribution.