A Empirical Study On The Growth Of Fiscal Expenditure In Guangdong Province From The Wagner's Law Perspective

The discussion on the scale of the government has been one of the hot issues in economic circles.Although Chinese government has carried out several times streamlining reform,the scale of financial expenditure has not stopped the trend of expansion.Guangdong Province,as one of economically developed provinces,the absolute size of its government expenditure has been ranked first in China,causing discussion on the rationality of government expansion.Therefore,it is necessary to study the factors influencing the scale of fiscal expenditure based on the current background of economic development,so as to discuss whether there is reasonable cause for the expansion of fiscal expenditure in Guangdong Province.Based on the Wagner's Law,one of the theoretical research achievements of government scale expansion,this paper analyzes the development situation of financial expenditure in Guangdong Province,under the background of Chinese industrialization and urbanization,and studies the relationship between industrialization and urbanization and fiscal expenditure.On account of the relationship,analyze whether the scale of government expansion is reasonable and propose recommendations to optimize fiscal expenditure.The first half of this paper mainly uses the methods of comparative analysis and theoretical analysis.First of all,the specific contents of Wagner's law are explained in detail,and the related literature of Wagner's law in China's applicability research is reviewed.Then,the financial expenditure of Guangdong Province,from 1978 to 2015,is reviewed.The scale of per capita fiscal expenditure,the development of the absolute scale of financial expenditure and the structural characteristics of financial expenditure the are analyzed horizontally and vertically to show the growth of scale of fiscal expenditure.Finally,the reasons of fiscal expenditure expansion are explained from the perspective of Wagner's law,which are summed up as industrialization leading to complicate social market relations and urbanization leading to the surge of public safety and health and other public goods quantity and quality,resulting in the government to bear more supply and management responsibilities,which boost the scale of fiscal expenditure expansion.In the latter part of the article,the empirical analysis method is adopted.First,the effect of industrialization and urbanization on the scale of financial expenditure is analyzed by establishing vector autoregressive model.Then,the empirical results are applied tothe rational analysis of government scale expansion.The relevant indicators of fiscal expenditure of the five coastal provinces,the two municipalities and Guangdong Province are compared to analyze further the rationality of the growth of fiscal expenditure in Guangdong Province.Finally,policy recommendations are put forward on how to optimize the government scale during the process of industrialization and urbanization in Guangdong Province.Through the theoretical and empirical analysis,it is concluded that industrialization and urbanization play a positive role in the expansion of government expenditure in Guangdong Province,which shows that the functions performed by the government in the process of industrialization and urbanization boost the scale of government expenditure.There is necessity and rationality for fiscal expenditure expansion,but government departments should continue to improve their administrative capacity and control the financial expenditure scale reasonably.