MIAO Xiaolin,FU Runmin:Division of Powers and Responsibilities,Background of Political Performance and Extraordinary Growth of Local Government Debt

Abstract：Objectively,there exists the separation of authority-responsibility in local government debt in China,which means that it is difficult to make debt power get constrained effectively by the debt obligations.With the induction of the “economic man” benefit for local governments,the local government debt will undergo an extraordinary growth beyond social benefit category.That is to say,separation of authority-responsibility has created conditions for the extraordinary growth of the local government debt,which is also decided by the benefit choice of the local government activity under different backgrounds of political performance.Through empirical analysis,the separation of authority-responsibility exacerbated the impact on local government debt growth which is based on the pursuit of economic growth expectations and the response of personnel expenditure pressure,and debt default is a main kind of indication.Then,from further analysis,we found that the effects on the extraordinary debt growth also depended on the strength of “economic man” benefit of local governments,which was negatively correlated with the expenditure independence decided by subsidies from governments of high levels and had positive relation with the promotion incentive of government officials.Finally,from the perspectives of changing the relation of debt authority-responsibility,transforming the political performance concept of government officials,and optimizing fiscal decentralization system,this paper put forward related measures to curb the extraordinary growth of local government debt.

Key words: Separation of Authority-responsibility, Background of Political Achievements Benefits, Extraordinary Growth of Debt

source:Finance & Trade Economics ,No.4,2015