Economic policy uncertainty and local government debt: Evidence from China
研究发现经济政策不确定性会提高地方政府外部融资成本，从而减少债务发行量；不确定性每上升1%，债务发行量下降0.0478%，且对财政压力小、经济追赶压力小、不确定性敏感度高的地区影响更明显。
Abstract This paper investigates the effects of economic policy uncertainty on local government debt issuance in China and identifies a transmission channel through the cost of capital. Our findings demonstrate that economic policy uncertainty raises the cost of external financing for local governments, leading to decreased levels of debt issuance. Specifically, a 1% increase in uncertainty related to economic policy variations leads to a reduction in government debt issuance of 0.0478%. In addition, our analysis reveals that local governments located in regions experiencing lower fiscal pressure, lower economic catch‐up pressure, and higher sensitivity to uncertainty are more responsive to economic policy uncertainty changes.