The Impact of Local Government Debt on Economic Growth in the Post-Epidemic Period - Taking Beijing as an Example

Abstract

As an important tool for China to achieve fiscal goals and promote economic growth, government debt has played an important role during the epidemic. Beijing, as one of the earliest regions in China to try the self-issuance and repayment of local government bonds, has a wealth of experience modifying the economic cycle via local government debt. However, by combing the existing literature, this paper reveals that there is ongoing debate in academia over the function of local government debt. Therefore, this paper examines the relationship between local government debt and economic growth using Beijing as an example and concludes that debt held by Beijing's local government primarily encourages economic growth by boosting public and private investment. Finally, based on that the local government debt of Beijing has a favorable impact on economic growth in the post-epidemic period, this paper puts forward the two problems of Beijing's excessive hidden debt risk and the bad debt use structure and then puts forward relevant suggestions.