Fiscal Competition and Public Expenditure Structure of Local Government——A Reflection Based on Literatures at Home and Abroad

By reviewing literatures on fiscal competition at home and abroad,the author recognizes the internal relationships between fiscal competition and public expenditure structure of local government,and deeply understands its economic nature.Based on the construction and the analysis of theoretical model,the author finds out that if government can provide rational institutional arrangement,fiscal competition among local governments will not lead to the distortion of public expenditure structure.Therefore,institutional absence is the real cause of the ineffectiveness of fiscal competition.In order to correct the distortion of public expenditure structure caused by fiscal competition of local government,the central government should provide reasonable institution arrangement to ensure the effective implementation of fiscal competition instead of opposing it,because fiscal competition is a neutral concept in essence.