The Effect of Leadership Transition on Government Expenditure: Evidence from China

This paper examines the impact of leadership transition on government expenditure, particularly the composition of the expenditure. Using the Chinese provincial-level data during the period 1992-2006, we find that the transition of provincial leaders seems to have no significant effect on expenditure composition, either in the short run or long run. However, if the origins of provincial leaders are taken into consideration, only when they are from the central ministries, the replacement of the party secretary is associated with significant changes in the composition of government expenditure in the long run. Moreover, in comparison with other regions, the composition of government expenditure in autonomous regions is more likely to remain stable in the short run when the replacement of provincial party secretary occurs.