Agent-based analysis of the fiscal contract system used in Chinese reforms in 1980-1984
The article aimed on development of agent-based approach for analysis of fiscal reforms that China conducted in 1980-1987, started them just after beginning of economic market-oriented reforms. It is shown that the reforms were conducted stage by stage. On each stage, especially on the first stages, there existed a few models of intergovernmental relations between the center and provinces, between provinces and cities. In general, such intergovernmental fiscal relations were asymmetric and therefore such system was called “asymmetric federalism”. All these models had two common features. One feature was a fiscal contract that the center got with each province. The second feature was that these contracts worked a few years without changes and only after some period, the new contracts were developed. In literature, there are discussions how good was that system from point of view of stimulation of economic growth in regions and in the country. The main goal of these reforms was to stimulate provinces and local governments to develop economy in regions. The critics of this system prove that such relations created risks for the central government to lose the control over macroeconomic stability in the country. The author of the article suggests that this problem can be studied from point of agent-based modeling, where the central government and provinces are independent agents with formalized relations among them. There are suggestions how to implement emulation experiments. The author developed the methodology of working out an agent-based model that is an important stage before computer programming and conducting of emulation experiments.