The Theory And Empirical Study Of The Effect Of Fiscal And Tax Policies On Chinese Resident Consumption

At present, the structural contradictions of high investment and low consumption have become the main problems that restrict the sustainable development of China’s economy. China’s economy has entered a new stage of !three overlay#, in which the expansion of resident consumption as the main body of the demand has become China’s !new normal#. In the face of China’s macro economy complexity of increasing inflation pressure and excess capacity, the government needs to carefully consider whether to continue the active fiscal policy, and comprehensively evaluate the effects of fiscal policy on resident consumption. The government should look ahead how fiscal policy promotes consumer orientation, in order to provide new ideas and theoretical basis for macro-control in the post-crisis era.This paper is in accordance with the !literature review- mechanism- situation study- model- empirical tests- policy recommendations# to carry out the analysis. This paper reviews the literature of fiscal effect on resident consumption, and then analyzes theoretical mechanism and current situation. Using the Chinese provincial panel data from 1999 to 2012, this paper multi-dimensionally analyzes the effects of the tax burden, tax structure, fiscal expenditure scale and fiscal expenditure structure on the resident consumption when time, space and third-party external factors differentiates, to verify the non-symmetry, spatial spillover and nonlinear effects that fiscal policies exert on the level of resident consumption, and to clear the direction and key role of fiscal policy. Main conclusions are as follows:First, this paper divides the potential period of non-Keynes fiscal policy from 1999 to 2012, and analyzes the effects of fiscal policy on resident consumption by dynamic panel GMM model. The results show that the tax revenue has significant inhibitory effects on the residents’ consumption in the stable period, and Keynes effects of tax revenue strengthen in the fiscal expansion period. The effect of tax income on resident consumption improves in the fiscal squeeze, resulted in a significant role, but the coefficient of total tax revenue effect is less than zero, namely that the tax revenue performances the non-Keynes effect in the period of austerity. The fiscal expenditure has significant inhibitory effect on resident consumption in the stable period, namely that the expenditure has non-Keynes effect in the stable period. The non-Keynes effect of fiscal expenditure on resident consumption strengthens in the period of expansion, while fiscal expenditure has significant non-Keynes effect on resident consumption in the fiscal squeeze. The dynamic panel GMM estimations find that China’s fiscal policy has non-Keynes and non-symmetry effect in in the period of fiscal expansion and squeeze.Second, based on the Kernel density function and Markov chain analysis method, this paper analyzes the agglomeration spatial and temporal transition of China’s provincial resident consumption. Kernel density estimation results show that the gap of resident consumption between Chinese provinces has narrowed, and the gap between consumption of residents club tends to be gentle. Markov chain transfer probability matrix Club shows that the relative position of the long-term dynamic distribution of resident consumption within Chinese province has convergence phenomenon. The distribution of the resident consumption in different regions has strong stability, and the possibility that resident consumption achieves leapfrog development does not exist. The space Durbin metric shows that tax burden and the government fiscal expenditure have positive impacts on resident consumption in China. At the same time, there is a negative spatial spillover features. The structure of tax system in indirect tax, and fiscal expenditure structure which is based on investment expenditure and consumption expenditure inhibit Chinese resident consumption. At the same time, there is a negative space spillover feature.Third, the conclusion of the panel threshold econometric model show that in the piecewise function of fiscal policies and the level of resident consumption, which is constructed on the base of the income gap threshold as an external variable, the optimal interval of the income gap absolute value with regard of tax burdens and the financial expenditure scale could promote the level of resident consumption is 4015 to 7016 yuan and 7912 to 10323 yuan respectively. Similarly, the optimal interval of the income gap relative value with regard of tax construction and the financial expenditure structure could boost the level of resident consumption is 0.126 to 0.171 and 0.127 to 0.172 respectively. Therefore, we should dialectically look upon the effect that fiscal policies exert on the level of resident consumption. That is, fiscal policies would generate neither absolute positive influence nor absolute negative influence on the level of resident consumption. The influence depends more on the effects of external factors. The key point to promote the level of resident consumption in China is the reasonable design and implementation of financial and tax policies.