Speaker: Professor Zhu Jun, Dean of the Institute of Fiscal and Tax Governance, Nanjing University of Finance and Economics

Host: Associate Professor Peng Tao from RIEM, SWUFE

Time: October 21, 2025 (Tuesday) 10:00-11:30

Location: Conference Room 1211, Gezhi Building, Liulin Campus, SWUFE

Organizer: RIEM

Speaker's Profile

    Professor Zhu Jun is a professor and doctoral supervisor, currently serving as the Dean of the Institute of Fiscal and Tax Governance at Nanjing University of Finance and Economics and the chief expert of a major project funded by the National Social Science Fund of China. His primary research areas include dynamic public finance and frontier issues in China’s fiscal and tax policy. He has led a major National Social Science Fund project, completed two national research projects, and headed multiple provincial teaching‑reform projects. 

    Professor Zhu has authored or edited ten textbooks and monographs, including Advanced Public Finance I–III, Local Public Finance, and China’s Tax System. He has published more than 80 academic articles in leading international SSCI journals such as Technological Forecasting & Social Change, Research in International Business and Finance, and Economic Modelling, as well as in top Chinese journals including Economic Research, Management World, Economic Quarterly, and China Industrial Economics. He has proposed influential theoretical views including the “systemic balanced fiscal perspective,” the “new theory of local public debt,” and the construction of a macro‑prudential regulatory framework. Professor Zhu has been selected for Jiangsu Province’s “333 Project” (second‑tier training), recognized as an outstanding young faculty member in Jiangsu universities, and has received multiple awards including the First Prize for National Outstanding Fiscal Theory Research (2022), the First Prize for Outstanding Research from the Chinese Society of Quantitative Economics, and the First Prize for Excellent Taxation Research from the China Taxation Society.

Abstract

    Local Government Debt Swap (LGDS) refers to a fiscal operation that replaces existing high‑interest, short‑term local government debt with low‑interest, long‑term government bonds, thereby making implicit local government liabilities explicit. This policy not only helps relieve local governments’ short‑term repayment pressures and reduce interest burdens, but also optimizes debt maturity structures, mitigates systemic financial risk, and supports the sustainability of local public finances.

    In China, 2015–2018 constituted a pivotal phase of the LGDS program—the largest, longest, and most representative cycle—totaling approximately RMB 12.2 trillion in swaps. This lecture develops a DSGE model to characterize the LGDS problem in China and to simulate its impact on the money supply. We then treat the 2015–2018 swap cycle as a quasi‑natural experiment and employ an intensity difference‑in‑differences approach to identify the effect of local government debt swaps on monetary aggregates.

    The main conclusions are as follows. First, the LGDS policy significantly increased regional money supply; the finding passes parallel‑trend and placebo tests and remains robust under various sensitivity checks. Second, heterogeneity analyses indicate that the policy effect is stronger in regions with higher swap intensity, lower debt risk, and larger provincial economies, suggesting that local fiscal and financial regulatory measures play a crucial role in managing government debt risk.