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Photo of Stefan Brehm

Stefan Brehm

Senior lecturer

Photo of Stefan Brehm

Fiscal Incentives, Public Spending, and Productivity – County-Level Evidence from a Chinese Province

Author

  • Stefan Brehm

Summary, in English

This article develops a new empirical approach to analyze the potential link between fiscal decentralization and economic efficiency based on a stochastic frontier model with spatial error correction. Fiscal decentralization is not considered to be a source of growth in itself but an incentive scheme that impacts local governments’ spending as a means to improve investment conditions. Panel data for Zhejiang Province between1995 and 2005 indicate that revenue and expenditure

decentralization both promoted allocative efficiency. Yet, the impact of fiscal incentives decreases with rising income inequality among county governments.

Department/s

  • Centre for East and South-East Asian Studies, Lund University

Publishing year

2013

Language

English

Pages

92-103

Publication/Series

World Development

Volume

46

Document type

Journal article

Publisher

Elsevier

Topic

  • Other Social Sciences

Keywords

  • China
  • Spatial dependence
  • Public spending
  • Fiscal decentralization
  • Economic efficiency

Status

Published

ISBN/ISSN/Other

  • ISSN: 1873-5991