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Central Transfers and Spatial Allocation Effects in China: A Quantitative Analysis
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DOI：10.1016/j.econmod.2026.107723.png)
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Abstract
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• The spatial general equilibrium model we construct considers firm relocation • We characterize the different roles of general and special transfers • Central transfers have created spatial misallocation of labor and firms • Central transfers’ spatial reallocation in 2016–2021 reduced aggregate output losses • Central transfers promote regional coordination at the expense of output and welfare
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