Local Government Debt and Growth Convergence

53 Pages Posted: 1 Jul 2021

See all articles by Haokun Pang

Haokun Pang

Department of Economics, University of Birmingham

Date Written: June 19, 2021

Abstract

The link between public debt and growth has long been discussed. This paper evaluates the effect on growth convergence from local government debt using a panel data of 276 Chinese cities. Our results show that Chinese local government debt hike since 2008 had a robust positive effect on growth convergence. We also provide and test several suggestive mechanisms behind our findings. And we use a policy shock as an instrumental variable to show that our proposed relationship is causal.

Keywords: Local Government Debt, Growth Convergence, Chinese Local Government Debt Hike

JEL Classification: E62, H39, O10, O20

Suggested Citation

Pang, Haokun, Local Government Debt and Growth Convergence (June 19, 2021). Available at SSRN: https://ssrn.com/abstract=3870309 or http://dx.doi.org/10.2139/ssrn.3870309

Haokun Pang (Contact Author)

Department of Economics, University of Birmingham ( email )

United States
07529785348 (Phone)

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