Research On The Relationship Between Finance Expenditure And Residents’ Consumption In Fujian

As one of the three carriages stimulating economic growth, Consumption plays an important role in the economic growth. By promoting the Consumption, especially Residents’ consumption, it can help to speed up the transformation of economic growth mode and achieve sustainable economic development. As the subject of construction on the West Strait Economic Zone, Fujian Province is facing the problem of inadequate residents’ consumption. It should strive to improve the level of consumption and change the mode of economic growth. As an important means of government macro-control, Finance expenditure has an important impact on Residents’ consumption. But the domestic and foreign scholars have not formed a unified conclusion on the relationship between Finance expenditure and Residents’ consumption. The research concentrates on the nation and does not take into account the finance expenditure of various provinces and cities are different, so the conclusions of the research cann’t provide effective suggestions for the optimization of finance expenditure of various provinces and cities. So, this paper takes Fujian Province as the research object, analyzing the relationship between finance expenditure and residents’ consumption of Fujian.This paper analyzes the reason of Finance expenditure changes and the influence factors of Residents’ consumption from the theory of Finance expenditure and Residents’consumption, and makes the theoretical analysis of the mechanism of crowding in effect of Finance expenditure on Residents’ consumption and crowding out effect. Then, according to Finance expenditure theory and Residents’consumption theory, this paper analyzes the finance expenditure scale, the finance expenditure structure, the residents’ consumption level, the residents’ consumption structure of Fujian Province, finding out the existing problems of financial expenditure in Fujian Province and grasping the change trend of consumption demand of urban and rural residents in Fujian province. Then, based on the prediction of relationship between finance expenditure and residents’consumption in Fujian Province, this paper divides the finance expenditure into two categories. The first kind of finance expenditure is the parts of finance expenditure which have crowding in effect on residents’ consumption, and the second kind of finance expenditure is the parts of finance expenditure which have crowding out effect on residents’ consumption. Then, this paper makes quantitative analysis on the relationship between finance expenditure and consumption of urban and rural residents in Fujian Province, and tests the prediction on the relationship between finance expenditure structure and consumption of urban and rural residents by the Time-varying parameter model and Recursive method.The results show that, in 2000-2012 years, the finance expenditure scale, the first kind of finance expenditure, and the second kind of finance expenditure of Fujian Province have the crowding in effect on the overall consumption, of which the first kind of finance expenditure with the largest crowd in effect; in 1992-2012 years, the finance expenditure scale, the first kind of finance expenditure, and the second kind of finance expenditure of Fujian Province have the crowding in effect on the urban residents’ consumption, of which the finance expenditure scale with the largest crowd in effect and the first kind of finance expenditure next; in 2000-2012 years, the finance expenditure scale, the first kind of finance expenditure, and the second kind of finance expenditure of Fujian Province have the crowding in effect on the rural residents’ consumption, of which in 2000-2008 years, the first kind of finance expenditure with the largest crowd in effect and in 2010-2012 years, the second kind of finance expenditure with the largest crowd in effect. Therefore, by increasing the finance expenditure scale of Fujian province and improving the first kind of finance expenditure’s proportion and optimizing the first kind of finance expenditure structure and the second kind of finance expenditure structure and improving the efficiency of finance expenditure, it can greatly increase the consumption of urban and rural residents in Fujian province and solve the consumption problem, at the same time, improve the contribution of residents’ consumption on the economic growth and realize the change of economic growth mode and the sustainable economic development of Fujian province. It also has important significance to speed up the construction of the West Strait Economic Zone.