Preliminary study on the relationship between land finance and the fiscal deficit — To take J province as an example

At present, financial problems of land in the local government are increasingly prominent. Although it to some extent alleviates the financial pressure of local government, it implies rent-seeking, distribution of income, increased financial risk and other issues. There are many reasons to cause land finance. Among them, the local fiscal imbalances, fiscal deficits continuing to increase is an important reason that causes the land finance. In this paper, we collect actual data based on provincial J, and make the empirical analysis of the relevance issues between land finance and the fiscal deficit. By making the unit root test to the two time series, we find that it exists cointegration between land finance and fiscal deficit. On this basis, we use error correction model to establish long-term equilibrium relationship equations between the two variables, and make the Granger causality test of them. Finally, we find that the changes of J provincial deficit are the Granger reasons that cause the changes of land finance. Then, we proposed some suggestions to solve the land finance problems of local government.