Positive and Negative County‐Level Fiscal Spillovers in China

ABSTRACT County‐level fiscal spillovers are crucial in determining the role of cross‐county fiscal coordination in fulfilling national economic commitments. Using county‐level economic and fiscal spending data from 2010 to 2018, we examine the spillover of fiscal spending across China's regions through output, trade, investment and consumption linkages. Specifically, we find positive fiscal output, investment and employment spillovers and a temporary positive consumption spillover that turns negative over time. Consistent with extant studies, we also find that the county‐level fiscal spillover effect in China is comparable to that in the United States.