The grand bargain on local government debt: Evidence from China's intergovernmental relations

This article uses Rubinstein’s bargaining theoretical framework to explore the link between intergovernmental relations and levels of local government debt. Utilizing the two-tier bilateral stochastic frontier method on provincial and Chinese municipal data from 2013 to 2021, the authors assess the impact of relative bargaining power on local government debt risk governance. The local government debt risk formation process is shown to be the consequence of the central government’s concession, and is affected by dynamic economic conditions.

本文采用鲁宾斯坦（Rubinstein）议价理论框架，探究府际关系与地方政府债务规模之间的关联。研究基于2013至2021年的中国省级与市级数据，运用双层双边随机前沿方法（two-tier bilateral stochastic frontier method），评估相对议价能力对地方政府债务风险治理的影响。研究结果表明，地方政府债务风险的形成过程系中央政府让步的产物，同时受动态经济条件的影响。