Dynamic Research On Impact Of Public Expenditure's Scale And Structure To Economy Growth In China

Public expenditure of government is the main policy tool of macroeconomic regulation & control. As for the affection of government public expenditure to economy growth, there are lots of controversy, and the opinions on effectiveness of government public expenditure are not coincided too. China obtained tremendous success by reform and opening policy in the past, and the Chinese government played a decisive role undoubtedly. How does the government's function affect the economy growth? Along with the economy system transform and public finance system reform, how will government public expenditure scale and structure affect economy growth? What is the assumption of adjustment of public expenditure structure? Therefore, study and research the affection of scale and structure of public expenditure on economy growth can tell us the diverse factors which influence public expenditure effect, then we can discover the problems and improve the impact of public expenditure on economy development. This research is certainly of great academic and practical importance to economy development rapidly of China.The paper was divided into four parts: the first part is the introduction, which mainly include the research importance, review and comments on foreign and domestic literatures, content and hypothesis. The second part is the theory of the whole paper. The paper commentated briefly on relationship of public expenditure and economy growth firstly, then in order to build a theoretical foundation for the research on dynamic relationship of GDP and component elements of public expenditure of Chinese government, the paper explained the substitution effect and complemented effect of financial variable .The third one is the framework of empirical research. At first, this paper simply illustrated the collection and selection of sample data, and then quantified the indexes about public expenditure and economy development, put forward theoretical assumption and build a model for empirical research. The last is the fourth part of this paper, according to the indexes, theory and model of the third part, chose data from 1978 to 2004, used the multivariate statistics analysis method to inspect the relationship between public expenditure and economy growth. The result showed that, optimization in structure of public expenditure in China can boost economy development; government's purchasing expenditure is complemented, and it can explain the long term growth of economy to a certain degree. But the off-budget expenditure is alternative, and it is not as strong as purchasing expenditure in explaining the long term growth of economy. Then the paper pointed out that, at the same time as improving the whole level of public expenditure, we should promote efficiency of government's public expenditure; at the same time as carrying out positive financial policies unceasingly, we should lay heavy stress on structural adjustment of public expenditure; the concrete measures should be changed according to the output elasticity of expenditure project's structure.The innovation of this paper consists in following aspects. The paper considered the combined impacts of public expenditure's scale and structure, and classified the categories of public spending to different and diverse types. The first one is according to the methods of national budget, added the budgetary expenditure and off-budget expenditure into the research framework, and put the alternative effect and complementary effect of public expending into consideration. Meanwhile, with another method, namely standards of government's function, the research obtained even more comprehensive conclusion than other researches.