Analysis on the Steady Growth Effect of China’s Fiscal Policy from a Dynamic Perspective

Abstract

Under the goal of a “new development pattern”, it is of great practical significance to accurately identify the economic growth effect of fiscal and tax policies. This paper constructs a TVP-FAVAR model to measure the economic effects of China’s fiscal and tax policies at the aggregate and structural levels. The results show that the reduction in total tax has a positive effect on real variables such as output and consumption; especially at the present stage, the promotion effect of total tax reduction on economic growth is relatively strong, but the stimulation effect on price is relatively weak. Further, the tax structure in which the ratio of direct tax to total tax increases and the ratio of indirect tax to total tax decreases is more conducive to the increase in output and consumption, and will not strongly stimulate the rise of price level. Therefore, at this stage, China should continue to vigorously implement the tax reduction policy and ensure the continuity of the tax reduction policy. At the same time, we should continue to optimize the tax structure and give better play to the regulatory role of fiscal and tax policies in income redistribution, so as to achieve the goal that fiscal and tax policies help build a “new development pattern” and promote high-quality economic development.

Can Local Government Debt Decrease the Pollution Emission of Enterprises?—Evidence from China’s Industrial Enterprises

“…The "GDP championship" is primarily manifested externally in China through the ongoing growth of local government debt [13]. The primary way that local governments obtain funding is via financing platforms that are connected to them.…”

“…However, there is relatively little research on the impact of local government bonds on the environment in China. Earlier studies analyzed the issue of local debt and the environment from the perspective of fiscal decentralization [11][12][13][14]. Yuan et al, (2022) [14] studied the impact of fiscal decentralization on air quality and found that fiscal decentralization worsens local air quality.…”