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Intergovernmental Fiscal Relationships in China: A Simple Model Based on the Nonsymmetric Nash Solution

Author

Listed:
  • Mototsugu Fukushige

    (Graduate School of Economics, Osaka University)

  • Yingxin Shi

    (Department of Economics & Management, Dalian Nationalities University)

Abstract
We propose a new empirical approach to analyzing fiscal decentralization and apply it to Chinese intergovernmental fiscal relationships between the central government and provincial governments. In calculating budgetary revenue and expenditure shares, we include extra budgetary revenue and expenditure. We find that although an increase in either income inequality or real per capita GDP lowers local governments f bargaining power within the budgetary system, local governments can offset this by obtaining more bargaining power over extra budgetary expenditures. Another finding is that although urbanization increases provincial governments f budgetary revenues, it also restricts the scope for further budgetary expenditure.

Suggested Citation

  • Mototsugu Fukushige & Yingxin Shi, 2013. "Intergovernmental Fiscal Relationships in China: A Simple Model Based on the Nonsymmetric Nash Solution," Discussion Papers in Economics and Business 13-21, Osaka University, Graduate School of Economics.
    • Handle: RePEc:osk:wpaper:1321
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    Cited by:

    1. Moriki Hosoe, 2017. "Special issue on economic analysis of law, politics, and regions," Asia-Pacific Journal of Regional Science, Springer, vol. 1(2), pages 427-429, October.

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    More about this item

    Keywords

    nonsymmetric Nash bargaining; intergovernmental fiscal relationships; China;
    All these keywords.

    JEL classification:

    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • P35 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - Public Finance

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