Government Investment, Appointment Duration and Debt Default
Read
DownLoad |
| Title | Government Investment, Appointment Duration and Debt Default
|
| Author | Gao Fei and Li Lianfa |
| Organization | Peking University |
| Email | lfli@pku.edu.cn |
| Key Words | Government investment, Debt default, Appointment duration |
| Abstract | Based on a government investment model, this paper analyzes the local government’s borrowing behavior under different appointment duration terms, proving the existence of time inconsistency. With shorter duration for appointment terms, excessive borrowing of local government is hard to contain; with longer duration for appointment terms, excessive borrowing of local government is controlled effectively. Then, this paper proposes the sovereign debt default model and analyzes the solvency of China’s central government. Although the debt ratio of Chinese government is not high, we should realize the hazard of the excessive growth of debt and economic stagnation. |
| Serial Number | WP913 |
| Time | 2015-08-14 |
|