In this paper, we successfully overcome the problems of data availability and investigate the fiscal multipliers for autonomous prefectures in China. We first estimate the long‐run elasticity of gross regional production with respect to fiscal expenditure at the prefecture level using autoregressive distributed lag models. We find that the estimated long‐run elasticity is much less than unity and that the estimated fiscal multipliers for prefectures lie between 0.61 and 4.93, with an average of 1.93. These results indicate that additional fiscal expenditure remains effective in increasing local income and promoting economic growth for most autonomous prefectures.
We propose a new empirical approach to analyze fiscal decentralization and apply it to Chinese intergovernmental fiscal relationships between the central government and provincial governments, using nonsymmetric Nash solution. In calculating budgetary revenue and expenditure shares, we include extra budgetary revenue and expenditure. We find that although an increase in either income inequality or real per capita GDP lowers local governments' bargaining power within the budgetary system, local governments can offset this by obtaining more bargaining power over extra budgetary expenditures. Another finding is that although urbanization increases provincial governments' budgetary revenues, it also restricts the scope for further budgetary expenditure.
We propose a new method to measure production inefficiency by estimating the target and production technology of individual units using quantile regression. This method not only measures inefficiency in total factor productivity but also inefficiencies in input utilizations. We also propose two methods for decomposing the estimated inefficiency. We apply this proposed method for measuring the inefficiency of primary sector production for the Xinjiang Production and Construction Corps in China to clarify its usefulness and advantages. We specify the capital stock using the area sown and other inputs to estimate the production function with the restriction of constant returns-to-scale. Results indicate that lower labor inputs make production inefficient, and the inefficiency of labor utilization makes a large contribution to the mean and variance of total inefficiency. We also compare the proposed inefficiency measure to those employing corrected ordinary least squares and data envelopment analysis. The estimated efficiencies obtained are similar to those for existing methods. However, the proposed method provides additional advantages, including information on the inefficiencies in input utilization.
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