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Abstract

Despite the growing importance of infrastructure financing, the extent to which individual officials’ political incentives influence subnational fiscal decisions remains underexplored. This study finds that political incentives play a decisive role in shaping the use of debt to fund infrastructure investment. Specifically, officials facing greater promotion pressure substantially increase infrastructure debt financing. Furthermore, tenure demonstrates an inverted U-shaped relationship with debt financing, reaching its peak at approximately 4.5 years. Moreover, the impact of promotion pressure shows temporal heterogeneity (reflecting evolving evaluation criteria post-2009) and spatial variation (stronger in eastern provinces). These findings provide robust support for the Promotion Tournament and Political Budget Cycle theories in the context of public finance structure, enhancing our understanding of how political economy dynamics drive subnational infrastructure financing decisions in China.

Keywords

promotion pressure political budget cycle debt financing infrastructure financing

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Promotion Pressure and Fiscal Behavior of Public Officials: An Analysis of Subnational Infrastructure Financing in China

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