Can Budget Performance Management Reform Improve Local Fiscal Resilience? Empirical Evidence Based on a Quasi-Natural Experiment

Promoting budget performance management reform in-depth is a crucial tool for the long-term enhancement of fiscal governance efficacy, as well as a way to break the structural solidification of fiscal resources and waste of money. Using a Multi-Period Difference-in-Differences model based on panel data from 31 Chinese provinces, autonomous regions, and municipalities between 2001 and 2021, the study empirically examines the effect of this reform on local fiscal resilience. According to the study, budget performance management reform increases local fiscal resilience, and its mechanisms of influence are related to the structure, risk, and efficiency of fiscal expenditures. The impact of this reform varies depending on fiscal decentralization, tax competition, and regional dispersion. The study’s conclusions provide more insight into how this reform impacts local fiscal resilience and offer policy recommendations for averting and reducing local fiscal risks.