Interregional infrastructure, competition for capital, and local public expenditure policies: Evidence from China's high‐speed rail networkLong Pu, Guangrong Ma and Chong Liu Pacific Economic Review, 2023, vol. 28, issue 3, 295-313 Abstract: Interregional infrastructure promotes market integration and enhances the mobility of capital, thereby intensifying fiscal competition among local governments. Exploiting the expansion of China's high‐speed rail (HSR) network as plausibly exogenous shocks, this study examines how Interregional infrastructure affects the fiscal competition among local governments. We find that after connecting with the HSR network, city governments tend to dedicate a lower proportion of public spending to consumption goods, which benefit immobile households, and invest more in productive inputs, which attract mobile firms. We also find that the negative effect of HSR connection on the proportion of consumption goods is more pronounced in peripheral cities than core cities because periphery cities face a larger increase in capital mobility due to the core–periphery effects of trade integration induced by HSR. Our findings indicate that the behavioural responses of local governments should be accounted for when assessing the social welfare of interregional infrastructure. Date: 2023 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:bla:pacecr:v:28:y:2023:i:3:p:295-313 Ordering information: This journal article can be ordered from Access Statistics for this article Pacific Economic Review is currently edited by Kenneth S. Chan and Yin-wong Cheung More articles in Pacific Economic Review from Wiley Blackwell |
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