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Two-way Interactive Effect Between Financial Pressure & Public Service Charges

Published in Economics (Volume 8, Issue 4)
Received: 28 October 2019     Accepted: 18 November 2019     Published: 21 November 2019
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Abstract

After the reform of the tax system, with the upward movement of financial power and the decentralization of power, the financial pressure of local governments in China has become increasingly prominent. As the previous model concluded, fiscal pressure may be the driving force behind the increase in local government public service charges. Therefore, it is necessary to study the interaction between financial pressure and public service charges. In this paper, it mainly researches two-way interactive effect between financial pressure and public service charges. The data of 31 provinces in China from 1999 to 2017 was used to construct the simultaneous equations model for fiscal pressure and public service charges, and then the empirical test was carried out for the interactive effect between the two with 3sls method. The research results show shown that there is an interactive effect between fiscal pressure and public service charges. That is, the public service charges is increased with the increase of fiscal pressures, explaining that when the government is facing financial pressure, the government will look for public service charges to make up for the gap in fiscal revenue and expenditure. The fiscal pressure is decreased with the increase of public service charges, explaining that public service charges are an effective way to ease financial pressure. In addition, the effect degree of the control variables related to financial autonomy and public service charges was analyzed in this paper.

Published in Economics (Volume 8, Issue 4)
DOI 10.11648/j.eco.20190804.14
Page(s) 149-155
Creative Commons

This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.

Copyright

Copyright © The Author(s), 2019. Published by Science Publishing Group

Keywords

Fiscal Pressure, Public Service Charges, Two-way Interactive Effect

References
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[2] Hu Shudong. The Relationship between the Central and Local Governments in Economic Development--Research on Changes of China's Fiscal System [M], Shanghai: Shanghai People's Publishing House, 2001: 168.
[3] Sun Wenji. Analysis of the Status Quo and Reasons of Charges in China [J]. Journal of Suzhou University, 1999 (02): 33-36.
[4] Lv Wei & Gao Shuaixiong. House Price Fluctuation, Land Finance and China’s Macroeconomics [J]. Comparison of Economic and Social Systems, 2016 (4).
[5] Chen Shuo. The Influence, Causes and Countermeasures of Highway Tolls under the Central and Local Fiscal Patterns [J]. Statistical Research, 2014, 31 (09): 72-79.
[6] Li Yonghui & Lin Sen. Research on Non-tax Revenue and Governance of Government [J]. Journal of Jishou University (Social Science Edition), 2018, 39 (01): 56-63.
[7] Welch & Skedegard. Governance Rather Than Management [J]. Publishing Reference, 2003 (02): 30.
[8] Li Xuanjing. Analysis of the Influence of Administrative Charges on Government’s Non-tax Revenue [J]. Market Research, 2018 (07): 72-73.
[9] Chen Kang, Arye L. Hillman and Gu Qingyang. Fiscal Centralization and Changes in Local Government Behavior: From Aid to Occupying [J]. Economics (Quarterly), 2002 (04): 111-130.
[10] Shu Hongtao. Contract Management of PPP Toll Road by Using the Cooperation between Government and Social Capital [J]. China Market, 2018 (26): 102-103.
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    Yang Le. (2019). Two-way Interactive Effect Between Financial Pressure & Public Service Charges. Economics, 8(4), 149-155. https://doi.org/10.11648/j.eco.20190804.14

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    Yang Le. Two-way Interactive Effect Between Financial Pressure & Public Service Charges. Economics. 2019, 8(4), 149-155. doi: 10.11648/j.eco.20190804.14

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    Yang Le. Two-way Interactive Effect Between Financial Pressure & Public Service Charges. Economics. 2019;8(4):149-155. doi: 10.11648/j.eco.20190804.14

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  • @article{10.11648/j.eco.20190804.14,
      author = {Yang Le},
      title = {Two-way Interactive Effect Between Financial Pressure & Public Service Charges},
      journal = {Economics},
      volume = {8},
      number = {4},
      pages = {149-155},
      doi = {10.11648/j.eco.20190804.14},
      url = {https://doi.org/10.11648/j.eco.20190804.14},
      eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.eco.20190804.14},
      abstract = {After the reform of the tax system, with the upward movement of financial power and the decentralization of power, the financial pressure of local governments in China has become increasingly prominent. As the previous model concluded, fiscal pressure may be the driving force behind the increase in local government public service charges. Therefore, it is necessary to study the interaction between financial pressure and public service charges. In this paper, it mainly researches two-way interactive effect between financial pressure and public service charges. The data of 31 provinces in China from 1999 to 2017 was used to construct the simultaneous equations model for fiscal pressure and public service charges, and then the empirical test was carried out for the interactive effect between the two with 3sls method. The research results show shown that there is an interactive effect between fiscal pressure and public service charges. That is, the public service charges is increased with the increase of fiscal pressures, explaining that when the government is facing financial pressure, the government will look for public service charges to make up for the gap in fiscal revenue and expenditure. The fiscal pressure is decreased with the increase of public service charges, explaining that public service charges are an effective way to ease financial pressure. In addition, the effect degree of the control variables related to financial autonomy and public service charges was analyzed in this paper.},
     year = {2019}
    }
    

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  • TY  - JOUR
    T1  - Two-way Interactive Effect Between Financial Pressure & Public Service Charges
    AU  - Yang Le
    Y1  - 2019/11/21
    PY  - 2019
    N1  - https://doi.org/10.11648/j.eco.20190804.14
    DO  - 10.11648/j.eco.20190804.14
    T2  - Economics
    JF  - Economics
    JO  - Economics
    SP  - 149
    EP  - 155
    PB  - Science Publishing Group
    SN  - 2376-6603
    UR  - https://doi.org/10.11648/j.eco.20190804.14
    AB  - After the reform of the tax system, with the upward movement of financial power and the decentralization of power, the financial pressure of local governments in China has become increasingly prominent. As the previous model concluded, fiscal pressure may be the driving force behind the increase in local government public service charges. Therefore, it is necessary to study the interaction between financial pressure and public service charges. In this paper, it mainly researches two-way interactive effect between financial pressure and public service charges. The data of 31 provinces in China from 1999 to 2017 was used to construct the simultaneous equations model for fiscal pressure and public service charges, and then the empirical test was carried out for the interactive effect between the two with 3sls method. The research results show shown that there is an interactive effect between fiscal pressure and public service charges. That is, the public service charges is increased with the increase of fiscal pressures, explaining that when the government is facing financial pressure, the government will look for public service charges to make up for the gap in fiscal revenue and expenditure. The fiscal pressure is decreased with the increase of public service charges, explaining that public service charges are an effective way to ease financial pressure. In addition, the effect degree of the control variables related to financial autonomy and public service charges was analyzed in this paper.
    VL  - 8
    IS  - 4
    ER  - 

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Author Information
  • School of Public Finance and Tax, Central University of Finance and Economics, Beijing, China

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