The Research On Effect Of Public Spending Policy Response To The Global Financial Crisis

After the global financial crisis, our government issued a series of intensive strategies of the expansion of public expenditure policy to maintain growth, expand domestic demand, adjust the structure, and its prominent feature is the expenditure direction on the big investment spending and heavy physical capital construction. Based on the mode of the expenditure, domestic demand in the number is expanded, but in the quality, the mode of economic development is curved more; in the aggregate, the goal of growth is achieved, but the structural adjustment is not achieved.This paper analyzed anti-crisis expansionary effects of public expenditure policies mainly from domestic demand, economic growth, inflation, demand structure, the regional economic structure, income distribution structure and so on.For domestic effect, based on the VAR model, the paper analyzed what and how anti-crisis public expenditure policy effected the private consumption and private investment and got the result which the anti-crisis policy of public spending bias of the investment demand stimulated the domestic private investment forcefully, the maximum effect is that 1% increase in public spending, private investment in fixed assets increased 0.0329%, and has little impact on consumption with long delay. In the first six months, the impact of public spending on consumption showed the main performance of crowding-out effect and then crowding-in effect in the following months, and crowding-in effect reached the highest value at the 11th month, the response value is 0.0084. It is quarter of the role of investment, but its positive impact might continued 10 months. Can be seen, the anti-crisis expansionary public spending policies quickly led to investment in related industries, but poor effect on consumption. The improvement of the social security system and price subsidies stabilified consumption from low and middle income class in urban and rural to some extent. Under the condition of lacking overseas demand, all the products going to countryside and trading sales with the old sold well, but the status of the consumer downturn did not fundamentally change.By the rapid driving of private investment, the aim of economic growth has been basically achieved. Based on the analysis of panel data of the role of public spending on the economic growth, the paper found that public spending promoted economic growth, especially in the middle provinces, followed by the eastern, western. Different structure of expenditure has different effect on economic growth. In the eastern provinces, forestry and water affairs functioned strongest, public safety in the middle provinces, and education in the western provinces. Under the condition of expansionary public expenditure policy, the economic decline has been suppressed, and the economy come back in the short term. But the quality of growth is low. extensive development is deteriorated further. Strong preference of Macroeconomic policies on economic growth, increased the difficulties of Chinese economic transformation. Too much emphasis on economic growth in the number, the neglect of quality, resulted in a waste of financial resource and heavy social costs.Through analysis of VAR model, impulse response, variance decomposition and Granger causality test, the conclusion is that the expansion of public investment stimulated the substantial investments, which increased the aggregate demand, but also contributed to inflation since the end of 2009, but the magnitude of its role is small, not played a decisive role. Inflation of the domestic energy prices from International transmission and natural disasters which caused to the reduce of agricultural products. From this point, expansionary policy of public expenditure was reasonable in front of economic recession in 2008 and the social security system behind the economic situation which led to inadequate automatic stabilizers. At the same time, the stimulus intensity was too large because of boosting inflation.For the structure adjustment from public spending, the article analyzed the demand structure, the regional economic structure and the structure of income distribution.By building a model based on the RCK Model about the demand structure and public expenditure, using OLS empirical analysis, public spending is an important cause of abnormal demand structure. After the global financial crisis, the expansion of public spending resulted in falling by 15.16 percentage points to consumption investment. The partial investment of public expenditure policy is caused by the egional economic co-development strategy, through the time series analysis, large-scale of Western investment spending tended to accelerate regional economic convergence.For the effect of the regional economic structure, the article analyzed regional support help accelerate regional economic convergence. Empirical analysis using VAR model found that public spending reduced the Gini coefficient of regional economy, and public investment spending is a major force in capital formation in the western regions. Combined analysis of the effects of economic growth can be drawn, the result of convergence is inefficient. The expansion of government investment in education can improve the factor endowments of poor regions, which could get the same convergence.For the effect of the scale structure of income distribution of residents, the article used overlapping generation model, and the result shows government intervention can correct the income distribution gap. Empirical test using regression analysis concluded that public spending worsened the income distribution, but reduced the extent of deterioration. Before the global financial crisis, whether urban or rural, lower income levels per capita disposable income growth, the slower. High-income per capita disposable income growth rate is much higher than the low-income, that the why the income gap has increased exponentially. After the global financial crisis, the situation has subtle changes. Due to the social security system, large scale and risen in the level of social security, in 2010, revenue growth rate in descending order is low-income, middle-income, high income groups, However, the stability of this pattern needs government policy support. In short, the transfer spending is too little to reverse the deterioration of income distribution. The income gap is bigger and bigger, but the expansion rate is significantly reduced. At the same time, benefiting from the effect of income redistribution due to inflation, income distribution continues being inclined to government and business. The share of labor compensation to GDP dropped to 45%. As income distribution has not been fundamentally improved, the real start of personal consumption needs more time.Seen from the effects of anti-crisis expansionary public expenditure policies, the intended purpose of the policy was structure adjustment, but in the process of implementation, the focus was moved on economic growth, rather than structure adjustment; on growth in the number, rather than the quality of growth. To some extent, the policy responsed to the global financial crisis reflected conservative and blindness.