The Impact of Economic Growth Target Management on the Scientific Nature of Local Budget Preparation: An Empirical Analysis Based on Provincial Budget Deviation

Abstract

Abstract: The scientific nature of budget preparation is a basic principle and requirement for establishing a modern budget system. Fully leveraging the macro-guiding role of economic growth target management on budget preparation is of great significance for improving the modern budget system. Using the provincial panel data from China for the period 2003-2022, this paper empirically investigates the impact and mechanism of the economic growth target management on the scientific nature of local budget preparation. The results show that the formulation of economic growth targets and their different characteristics have significant differences in their impact on the deviation of the revenue budget. Both the intensification of growth targets and the hard constraints of growth targets have an expansionary effect on the deviation of the revenue budget, while the soft constraints of growth targets have an inhibitory effect. The mechanism analysis reveals that the intensification and hard constraints of growth targets will prompt local governments to expand the scale of land transfers and strengthen tax collection, which may increase the deviation of the revenue budget. In contrast, the soft constraints of growth targets will encourage local governments to adopt a prudent land transfer policy and flexibly adjust tax efforts, which may reduce the deviation of the revenue budget. Further analysis shows that the completion degree of growth targets has an expansionary effect on the deviation of expenditure budgets, while the intensification and soft constraints of growth targets have an inhibitory effect. Therefore, it is recommended to continue to play the stabilizing role of the economic growth targets, and scientifically and rationally set economic growth targets; improve the efficiency of land resource allocation and standardize the enforcement of corporate income; advance the reform of zero-based budgeting for project expenditures, and unify the standards for budget disclosure.

Key words: the modern budget system, local budget preparation, deviation from the revenue budget, economic growth target management

CLC Number:

F812.27

Feng Hui. The Impact of Economic Growth Target Management on the Scientific Nature of Local Budget Preparation: An Empirical Analysis Based on Provincial Budget Deviation[J]. Contemporary Finance & Economics, 2025, 0(8): 29-43.

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