The Research Of Expenditure On Rural Public Goods Effect Consumption Of Rural Residents In China

At the background of development and construction of new countryside in China, shortage of expenditure on rural public goods result of failure to effectively establish a long-term mechanism which can promote sustained and steady increase of farmers and thus stimulate consumption of rural residents. This paper based on 2000-2008 panel data of 31 provinces in China, using GLS estimation method to analysis the relationship between expenditure on rural public goods and consumption of rural residents.This paper analyzes the status of expenditure of rural public goods and consumption of rural residents first, found that both of them are currently in a very stable phase of ascension. Moreover, the structure of both in provinces has also adjusted, but the expenditure on public goods in rural areas in agriculture and on transportation and telecommunication services remained stable, shows the steadfast determination of developing rural economy and of increasing farmers'income and consumption. At the same time, the Engel coefficient of the provinces are basically showing a declining trend, and the structure of consumption in rural areas has also improved. Based on the current situation, this paper discussed the influence mechanism of expenditure on rural public goods with consumption of rural residents. Theoretical analysis conclude that substitution effect may coexist with complementary effect between expenditure on rural public goods and consumption of rural residents, so the overall performance may appear to crowding-in effect or crowding-out effect.In view of this, this paper established a variable intercept panel model to analysis the influential effect of the expenditure on rural public goods on total consumption of rural residents and the structure of consumption. The results show that the 21st century expenditure on rural public goods have shown crowding-in effect on consumption of rural residents and its structure. and improving the income of rural residents is the key to the development of rural consumption, so that the consumption of rural residents to achieve sustainable and healthy development.But, the orientation of expenditure on rural public goods showed a different effect onconsumption of rural residents, and expenditure on rural public goods also have quite different effects on different consumption categories of rural residents. To this end, this paper summarized the results, and put forward some policy suggestions.