Can local People's Congress supervision improve the expenditure behavior of local governments? Evidence from provincial budget review

Abstract

The Local People's Congress budget review and supervision is an important measure to “effectively safeguard and improve people's livelihood” under the changes of the current major contradictions. Using the multi period DID method, we found that after the revision of the regulations, the local people's livelihood public service expenditure bias and expenditure efficiency were significantly improved. This conclusion is still valid after considering a series of robustness tests and possible explanations. The specific ways for it mainly include the constraint on the opportunistic behavior of local governments and the signal transmission function of the LPC's supervision. Further research shows that more effective media attention, more open and transparent rule of law environment, greater financial pressure and regional differences can all affect the effect of LPC's supervision of spending behavior. The research conclusion shows that the role of LPC supervision should be further played to ensure the development of local people's livelihood and promote the construction of government revenue and expenditure management system.