Abstract: The reform of participatory budget can not only manifest the value of democracy, but also contain profound economic significance. The participatory budget is conductive to achieving the expression, coordination and unification of public preferences, making the use of public funds meet the real public demands, and promoting the efficiency of public budget. The participatory budget can improve the transparency of public budget, correct the information asymmetry between the public and the government, and reduce the information search cost of the public and the moral risk of the government. The reform mode of China’s participatory budget agrees with China’s reform path, i.e., the exploration and innovation by the local governments and the recognition and support by the central government, which reflects the cooperative game between the local governments and the central government. The participatory budget can promote the competitive game between the local governments; in return, the competitive game between the local governments can promote the further development of the participatory budget. The Amendment to Budget Law passed in August 31, 2014 can also provide the relative institutional support for the advancement of the participatory budget.

Key words: participatory budget; efficiency of public budget; information asymmetry; the public