An Empirical Study On The Relationship Between Financial Expenditure Scale And Structure And Economic Growth In Zhejiang Province

Public education expenditure is the direct input of government for education, it funds most schooling spendings. Public education expenditure is irreplaceable to education development in China. Human capital theory and endogenous growth theory emphasize importance of education investment in human capital formation of labors, human capital is a reward-increasing factor for economic growth.In this article, we gather and process2002-2011data of public education expenditure, capital, labor, and GDP of Zhejiang province, construct econometric model based on expanded Cobb-Douglas production function to include public education expenditure. EVIEWS gives us results as follows:in Granger Causality Test, public education expenditure, capital, labor make up the Granger causality of GDP growth together; in analysis of VAR model and pulse response graph, public education expenditure have positive impact on GDP growth, by OLS analysis, primary and middle education expenditure have greater promotion effect to GDP growth than higher education. We suggest that government put more public resources in education to support lasting economic growth, at the same time, encourage industry upgrading to gain greater revenue from education investment and for human capital of labor.