| It's of interest to study Economk growth, a Fundamental aim of macro-economic policy, especially for such a developing country as China. Since 1978,China has been in the transition from planning economy to market economy in order to accelerate its economic growth. In transition the fiscal policy of china faces much problem: the first is that government expenditure-GDP ratio has declined and quite low compared with other countries.The second is the distribution of government revenue wants to be improved.The third is government expenditure structure should be reconstructed.The last one is how should china treat budget deficit and public debt, which have been expanded greatly since active fiscal policy began in 199S.the effects of fiscal policy on economic growth and should be investigated. As far as domestic literature is concerned, though there is much research on economic growth in China, few studies the impacts of fiscal policy on economic growth systematically and deeply, furthermore quantity analysis is scarce. All these motive me to do research on such a subject.The primary aim of this dissertation mainly embraces two: one is to build or introduce relative theoretical frameworks on the effects of fiscal policy on economic growth, such as the traditional income-expenditure model, model for public spending and endogenous growth, for public investment and economic growth, for public R&D capital and economic growth, for tax policy and endogenous growth, for deficit, public debt and economic growth. Another is empirical analysis for fiscal policy and economic growth in china, including estimating the fiscal policy multiplier, optimal government size, the role of public capital, public R&D capital and human capital played in influencing economic growth and their efficiency size, the impacts of tax on capital income, labor income and consumption, total tax /GDP ratio, and fiscal structure on growth, measuring the crowding-out effect of budget deficit and public debt, assessing the sustainability of fiscal policy, which are also what the innovation is in this paper.As for analytic methodology, this paper is characterized by dominant deductive reasoning, the combination of positive with normative analysis with the former underlined, the mix of qualitative and quantitative analysis with the latter emphasized. The paper consists of nine chapters, each of which comprises conceptual framework, empirical evidence, and conclusion and policy suggestion on the whole.Chapter one investigates the effect of fiscal policy on economic growth in traditional income-expenditure model, As first of all the IS-LM and mundell-Fleming model in mathematical language are introduced .which puts emphasis on the fiscal policy multiplier to the aggregate output, then a IS-LM model is estimated using china data which indicate the shape of IS and LM curve is normal and IS-LM model can be applied to china macro-economy. The fiscal policy multipliers, computed with the estimated parameters, are about 2 on average for china in 1983-1999, with which of every year the impact of fiscal policy change on the aggregate demand and its rate of growth is assessed, implying that fiscal contraction has adverse impact on the demand, fiscal expansion contributes to GDP growth about 20%-30%.Finally,some relevant policy is suggested to spur current domestic demand.Chapter two study the impact of government size as measured by government consumption in the national accounts on economic growth. First the bulk of empirical research on the impact of government services on growth is reviewed. Then a model of endogenous growth developed firstby Robert Barrow(1990) is introduced where the role of government services is examined, showing that government services are optimally provided when their marginal product equals unity. Thirdly the optimal government size for china is estimated by investigating the role of public services in the production process, and the empirical result suggests that government services are significantly productive,underprov...
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