Abstract:
Basing on fiscal reaction mechanism, and combined with the specific features in China and the economic climate changes, this paper is committed to form the theoretical framework of government debt risk analysis, and discuss the fiscal space. At the same time, considering the economic uncertainty in China after the crisis, we analyze how to rebuild our country's fiscal buffers. The results show that China is in the early stage of “fiscal fatigue”,and using the second term function of government debt ratio may fit the reality of China’s financial response better. What is worth noting is that the fiscal space in China is reducing accelerately, specially there is a significant decline in 2010, and worse to worse the economic downturn in the economic slowdown will further reduce the fiscal space. Meanwhile, with the increase of the financial reserve ratio, the “vertical effect” that the fiscal reserve improve the fiscal response is offsetting the “horizontal effect” that increase the cost of fiscal adjustment acceleratly. What’s more, the marginal diminishing effect that the financial reserve improve fiscal response is not significant at this stage, and compared to the situation without financial reserves the fiscal space is raised by 8.85% when economic is dim, however, when in normal state is only 8.59%.
李丹, 庞晓波, 方红生. 财政空间与中国政府债务可持续性[J]. 金融研究, 2017, 448(10): 1-17.
LI Dan, PANG Xiaobo, FANG Hongshen. Fiscal Space and Government Debt Sustainability in China. Journal of Financial Research, 2017, 448(10): 1-17.
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