Fiscal expenditure and industrial land price in China theory and evidence Pi‐Han Tsai, Chien‐Yu Huang, Tsun‐Feng Chiang
By: Tsai, Pi Han
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Contributor(s): Huang, Chien Yu | Chiang, Tsun Feng.
Material type: 
ArticlePublisher: 2020Subject(s): GASTOS FISCALES LOCALES | SUELO | INDUSTRIA | PRECIOS | CHINA | MODELOS ECONOMETRICOS
In:
Contemporary Economic Policy v. 38, n. 4, October 2020, p. 593-606Summary: This paper aims to discover the mechanism behind the positive correlation between local fiscal expenditure and industrial land price in China, a stylized fact discovered by bivariate and regression analyses. The model shows that if the positive externality of government expenditure on growth is sufficiently high, the local government has an incentive to increase public spending in exchange for the reduced demand for industrial land by charging a higher markup and driving up the industrial land price. Therefore, we observe a positive correlation between the local fiscal expenditure and industrial land price.
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Resumen.
Bibliografía.
This paper aims to discover the mechanism behind the positive correlation between local fiscal expenditure and industrial land price in China, a stylized fact discovered by bivariate and regression analyses. The model shows that if the positive externality of government expenditure on growth is sufficiently high, the local government has an incentive to increase public spending in exchange for the reduced demand for industrial land by charging a higher markup and driving up the industrial land price. Therefore, we observe a positive correlation between the local fiscal expenditure and industrial land price.
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