Abstract: At present, our country local government debt is high, the private investment drops seriously, urgently needs the policy adjustment. Through the establishment of panel VAR model, this paper analyzes the long-term and short-term dynamic equilibrium relationship among local government debt, government investment and private investment.It is found that local government debt and local government investment have significant crowding out effect on private investment. Private investment is in a weak position and vulnerable to negative impact of local government debt and local government investment.Therefore, in the future, we should control the scale of local government debt, establish a regular and transparent monitoring mechanism of local government debt risk, standardize the borrowing behavior of local governments, control the increase of debt, straighten out the relationship between government investment and private investment, and promote the complementary advantages of government investment and private investment, benign interaction.