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ABSTRACT
We estimate the effect of vertical fiscal flows in China using Bayoumi and Masson method. The results show that vertical fiscal flows have a redistribution effect on regional economy and reduce regional differences for about 30.8%. But there is no evidence shows that fiscal flows automatically stabilize the inter-regional economy. Both effects increase in recent years. Compared with other fiscal-federal countries, China has a stronger redistribution effect and weaker stability effect.
Disclosure statement
No potential conflict of interest was reported by the author(s).
Additional information
Funding
The work was supported by the National Natural Science Foundation of China [71933001].