An Econometric Analysis Of The Relationship Between Public Expenditure And Economic Growth

The relationship between public expenditure and economic growth has been an important in macroeconomic research.Since there are defects such as monopoly,public goods,external as well as asymmetric information in the market economy itself,making the government's macro regulation and control inevitable.As an important meansof macro-control,government fiscal policy has an important influence in promoting economic stability and development,while public expenditure(also knownas financial expenditure or government expenditure)as the main fiscal policy lever,the scale and structure of which are closely related with the region's economic growth.The first of the paper is related to fiscal expenditure and economic growth in the literature and theory summary,and then based on the laws of Wagner research the effects of the relationship between public expenditure and economic growth in China,including the relationship between the scale of fiscal expenditure and economic growth,and the relationship between financial structure and economic growth.And select the relevant data of China from 1978 to 2014 public expenditure total amount and components of public expenditure,including the relationship between the structure change of GH cointegration test,and Granger causality test to examine public expenditure and economic growth,and draw the following conclusions:first,GH cointegration test results show that there is a structural break cointegration relationship between economic growth and public expenditure,so we can analysis of the relationship within the framework.Second,public expenditure on economic development long-term elastic analysis results show that most of the total expenditure at breakneck speed increased to verify the Wagner's law,namely when a country's GDP growth,public spending will increase,and will grow at a greater proportion.Third,error correction model showed that,among the variables of short-term consumption elasticity is greater than zero,short-term adjustment coefficient is less than zero,performance for negative adjustment mechanism,if variables in the current deviates from the equilibrium state,due to the existence of long-term equilibrium constraints,so the deviation will be corrected in the next period,to ensure that it will not significantly deviate from the long-term equilibrium,and then verify the Wagner's law of long-term consumption elasticity.Causality test between variables further verifies the Wagner rule,also confirmed Keynes model.Specifically,there is a two-way causal relationship between health expenditure and administrative expenditure,agriculture expenditure,social security expenditure and economic growth.According to the empirical results,the recommendations include:first,administrative expenses,reduce unnecessary administrative expenses,strict control of administrative expenses,establish and improve the administrative expenditure.Now our country's management system is not perfect,management of the administrative expenses there is a big loophole,society public funds,extravagance and waste are generally.This is a waste of public resources.The research in this paper has proved that the long-term elasticity of administrative expenditure to economic growth is significantly greater than zero.Therefore,it is necessary to establish a reasonable administrative expenditure system,so that not only can improve the efficiency of administrative expenditure,but also can effectively promote economic development.Second,increase expenditure on supporting agriculture,strengthen the agricultural base.Fiscal expenditure for supporting agriculture is an important method for the government to protect agriculture,and it is necessary to strengthen the protection and support of the government to agriculture.To increase rural public infrastructure spending,such as rural roads,power grids and other infrastructure construction and water conservancy construction.The increase of rural production inputs,increase investment in rural education,improve the quality of workers,increase of agricultural scientific research investment.Third,to strengthen the public health care investment funds.Increase public health institutions,To promote the reform of the current medical system,unify the medical treatment and health care of enterprises and institutions,and establish a unified medical insurance system to achieve the.Improve the construction of primary health care institutions,so as to reduce the medical costs of residents.Fourth,social security expenditure,the development of the economy,social security can provide a stable social environment,to meet the needs of the community members of the minimum living.We should perfect the legal system of social security,and improve the social security funds transfer payment means.In the modern life,the function of the community service is more and more important,so we should develop the community service,realize the true fairness and justice.