Intergovernmental Fiscal Relations and Economic Growth

Public finance constitutes the foundation and a major pillar of state governance,and intergovernmental fiscal relations play an indispensable role within this framework. China's reforms in intergovernmental fiscal relations have profoundly shaped the behavior of both the central and local governments,as well as the trajectory of China's economic development. These reforms not only challenge established Western theories of fiscal decentralization,but also enrich theoretical and empirical research on intergovernmental fiscal relations in the Chinese context. Based on four stylized facts of China's intergovernmental fiscal relations,this paper systematically reviews the development of theories of intergovernmental fiscal relations and constructs a general theoretical analytical framework for understanding how intergovernmental fiscal relations affect the fiscal expenditure structure and economic growth. Furthermore,this paper provides a systematic review of representative empirical studies on the impact of intergovernmental fiscal relations on economic growth. Finally,informed by the research frontier,China's intergovernmental fiscal practice,and central government policy guidance,this paper identifies several important issues in central-local and sub-provincial intergovernmental fiscal relations that warrant further investigation.