Abstract: According to the causes and characteristics of local government debt risks, this paper makes use of the system dynamics archetypal analysis technology to analyze the multiple feedback in local government debt risk system and constructs a rate-variable foundational in-tree model with such variables as fiscal revenue, regional GDP, the level of urbanization, local government investment volume, scale of local debts and debt risks, etc.. A test is carried out with the panel data of China’s Eastern, Central and Western regions, and the findings show that currently the local government debt risk in China is relatively controllable, there is a tendency of not increasing but declining latterly. However, the regional differentiation is more serious. According to the results of the parameter regulation, this paper offers some policy-related recommendations, such as establishing and perfecting the local government debt risk assessment and early warning mechanisms, improving the local government fiscal risk resisting ability, improving the check-up system of officials’ career achievements, accelerating the development of the tertiary industry, strengthening the transparency and standardization of local government debt management, and so on.

Key words: local government debt; fiscal revenue; debt risk; system dynamics