The Effect Of China’s Fiscal Expenditure On Macro Economy

Economic fluctuation as a normal economic growth constantly affects the process of economic development,once the economy fluctuations occur,the fiscal policy is needed to regulate macroeconomy.However,for this opinion,the existing researches voice different sounds,mainly focusing on the fiscal expenditure how to affect the residents’ consumption and the fiscal expenditure type how to influence the key economic variables.In order to study how the fiscal expenditure types influence China macroeconomic variables,especially residents’ consumption,the fiscal expenditure was divided into consumer spending,investment spending and transfer payments.And the neoclassical DSGE model was chosen to explore the influence of these three kinds of consumption and production technology impact on macroeconomic variables.Parameters of the model were adjusted based on China’s national conditions.The solution,simulation andBayesian estimation of the model were done by the software of Matlab and Dynare4.4.3.And the condition of China economy was analyzed based on the final results and several conclusions were drawn:first,the neoclassical DSGE model conformed to China’s macroeconomic data;second,the government’s consumer spending had a crowding out effect on private consumption based on the study of impulse response figures of different fiscal expenditure types.And the direction of impulse response for residents’consumption was affected by the scope of relative risk aversion coefficient.The government’s transfer payment had piled into effect on residents’ consumption due to the directly effect of the government’s transfer payment on the residents’ consumption.The government’s investment spending had a two-way street effect on the residents’ consumption.Namely,with the capital accumulation,the crowding out effect would transform into crowding into effect;third,in China the relative risk aversion coefficient was about 1.0853,showing that our country residents preferred to avoid risk.And for the quarterly allowance for depreciation of capital,private capital depreciation rate was slightly higher than the public capital depreciation rate,but the difference was not very great;forth,technology impact had significant influence on China’s macro economy and through impulse response figures of the impact of technology,we found technological progress had played a good role in promoting the economic development.Therefore attaching great importance to the technological progress was imperative.