Fiscal Decentralization,Local Deficit Financing and Land Finance——Based on China's Provincial Panel Data of 1998-2010

Abstract

From the perspective of local deficit financing,this paper explores the internal logic working between fiscal decentralization and local government's land finance. Theoretical analysis shows that local deficit expansion caused by fiscal decentralization in China has become an incentive for local governments to grab off-budgetary financial revenue,which impels them to take an active land finance strategy to increase local fiscal revenue. The empirical test supported by provincial panel data also proves that the fiscal decentralization and local deficit financing both have obvious positive driving effects on the land finance.