Fiscal Decentralization,Local Government Investment and Inflation ——Evidence from China in Transition

Abstract

Based on the phenomenon that serious inflation and local investment overheated coexist now,we establish one empirical model in order to investigates into the impact of local government investment impact on inflation under fiscal decentralization system.The study indicates that the local government’s investment in China form a positive factor in inflation,local government investment windens the needs of the community through the multiplier effect of stimulating.At the same time,the increased investment strengthen the dependence on the land finance,the two together promotes a rise in inflation.