Abstract：
The article investigated the likely cause of the local government debt crisis. We use the panel data of 439 prefecture-level cities quasi-municipal bond between 2009-2012 as proxy variables of local government funding vehicle debt, investigating the relationship among the issuance and the cost of local government funding vehicle debt and land finance. we found that the less land-transferring fees is , the more local government inclines to issue bond, the higher interest rates on government debt is, the more likely a debt crisis will appear. Further studies show that the city will issue large amounts of debt in case of increasing financial expenditure, and then the city will be at greater risk of debt repayment and facing the higher interest rates on government debt because of the less land revenue and weaker solvency. This kind of area which is lack of land revenue will roll over old debts with new borrowing on account of debt repayment requirements. In this way, the local government may fall into debt trap. Because the motivation of bond-issuing and the debt paying ability had almost no change, issue sizes lack of efficient control and hard budget constraints, limiting local government's financing and debt replacement way cannot solve the basic problems of local fiscal crisis.
SI Hai-ping,WEI jian,LIU Xiao-ge. Land Finance and the Circle Trap of Local Government Debt — Based on Motivation of Issuance and Cost of Issuance[J] Economic Survey, 2016,V33(4): 155-160
2016 
