Volume 8, Issue 4, December 2019, Page: 149-155
Two-way Interactive Effect Between Financial Pressure & Public Service Charges
Yang Le, School of Public Finance and Tax, Central University of Finance and Economics, Beijing, China
Received: Oct. 28, 2019;       Accepted: Nov. 18, 2019;       Published: Nov. 21, 2019
DOI: 10.11648/j.eco.20190804.14      View  25      Downloads  5
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.
Keywords
Fiscal Pressure, Public Service Charges, Two-way Interactive Effect
To cite this article
Yang Le, Two-way Interactive Effect Between Financial Pressure & Public Service Charges, Economics. Vol. 8, No. 4, 2019, pp. 149-155. doi: 10.11648/j.eco.20190804.14
Copyright
Copyright © 2019 Authors retain the copyright of this article.
This article is an open access article distributed under the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0/) which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
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