An Empirical Study of Fiscal Risk from the Perspective of "Two-way" Decentralization

Two-way decentralization refers to government-to-market decentralization and intergovernmental fiscal decentralization.In the process of decentralization,fiscal risk increases or decreases with the progress of decentralization.Through the theoretical analysis and empirical test with the use of provincial panel data,the paper finds that: the decentralization from government to market is conducive to the reduction of fiscal risk,but its role of positive impact shows a downward trend;the improvement in the degree of fiscal decentralization within the government is not conducive to the reduction of fiscal risk;the institutional friction generated by the current vertical-crossing progression mode of two-way fiscal decentralization significantly increases fiscal risk.Therefore,it is necessary to further rationalize the institutional arrangement in order to eliminate all kinds of social risk arising from the reform process.