As for local governmental bonds, there are two kinds of principle - agent problems between local governments and residents： creditor＇s fight and debt agent, and public policies agent. Local governments which depend on paternalism have motivation to shift debt to the central government, which results in the artificial expansion of local governments bonds scale; the specialty of local governmental ＂economic man＂ promotes them to consciously use public debts to pursue their own interests and ignore public finance risk, which implicates the pos...
