CHEN Sixia, CHEN Zhiyong:Demand Response and Constraint Mechanism of Local Government Debt:Empirical Revelation and Analysis

Abstract：Based on concluding the experience of US municipal debt management, this paper analyzes the constraint mechanism of local government debt under the framework of decentralization and tax-sharing system.Viewed from intergenerational cost sharing, it is necessary to set up a demand-oriented constraint mechanism in the financing of public project, as the repayment capital of local government debt comes from the increasing tax burden of residents.Empirical analysis also shows that the demand response is better in welfare public project than that in monopoly and general public project.So we should pay more attention to the default risk of the latter ones.We believe that setting up demand constraint mechanism of public project financing and keeping the balance between investment cost of public projects and tax burden are keys to prevent local government debt from unordered expansion.

Key words： Demand Response    Allocation Efficiency    Constraint Mechanism    Empirical Analysis

source:Finance & Trade Economics ,No.2,2015