The Nonlinear Effects Of Government Consumption On Economic Growth In China

Since the reform and opening up,our economy has made remarkable progress.Gross domestic product increased from 3650.17 billion yuan in 1978 to 68905.21 billion yuan in 2015.Nominal GDP grew at an average annual rate of 16.67 per cent,while real GDP grew at an average annual rate of 9.78 per cent.In terms of nominal GDP and real GDP growth,we have made remarkable progress in this period of economic growth.Consumption(including residents’ consumption and government consumption)is known as one of the "troika" of economic growth.Government consumption occupies an important position in the consumption structure and is the driving force of China’s economic development.By the end of 2015,consumption accounted for a large share of GDP.The final consumption rate(final consumption/gross domestic product)is generally maintained at between 48.5%and 63.3%,with a downward trend from 2000 to 2010 and a slight recovery from 2010 to 2015.The overall change in government consumption(government consumption/GDP)from 1996 to 2015 was modest,averaging 14.09%.The data show that the proportion of government consumption in the final consumption is growing.The final consumption includes consumer spending and government consumption,which is bound to affect the consumption rate of residents,and ultimately affecting economic growth.Under the above background,this article first to define concepts such as government consumption,economic growth,and then expounds the government consumption related theory and the qualitative analysis of the impact of economic growth,as part later empirical theoretical basis.Then,based on the provincial panel data from 1995 to 2015 and with general budget revenue growth for the transformation variables,this paper uses the panel smooth conversion model to explore the impact of government consumption expenditure on economic growth.The results show that government consumer spending has a non-linear relationship to economic growth,and its effect is positive.When the average budget income is more than 8.3 percent,the influence of government consumption has been shifted in a non-linear way,which is gaining influence.However,with the increase in the growth rate of general budget revenue,although the impact of government consumption on economic growth will increase,but its impact on the consumption of rural residents and export coefficient will have an extrusion effect,which will change the impact of economic growth structure.Finally,this paper puts forward policy recommendations on how to better promote economic growth and optimize the level of economic development.