Analysis Of The Impact Of Rural Financial Expenditure On Rural Residents' Consumption

The "First Document", sighed by the central in 2009, pointed out that "the greatest potential to expand domestic demand was in the rural areas, the foundation support to achieve stable and rapid economic development was in agriculture, the key and difficult to protect and improve people's livelihood was at the farmers" Under the impact of the financial crisis, to expand domestic demand, especially consumption demand of rural residents was even more important. The expansion of domestic demand mainly depended on macroeconomic control, expenditure policy as an important macro-control measures should be reasonable to develop and implement. How to develop effective fiscal expenditure policy in order to boost consumption of rural residents, further expand domestic demand, counter the financial crisis, achieve stable and rapid economic development, and was the need to conduct targeted research. It is in this context to propose the theme of this paper about the impact of rural financial expenditure on consumption of rural residents.In this article, the rural financial expenditure was divided into two major categories of financial expenditure for supporting agriculture and public expenditure in rural areas, then systematically analyzed their impact on the consumption of rural residents using macro data and micro data, and on the basis of the analysis of impact on total consumption expenditure of rural residents, with emphasis on the consumption of rural residents has been studied appliances. On the basis of defining the concepts involved in this paper and reviewing previous literatures, this paper conducted a detailed theoretical analysis drawing on existing theoretical research on the subject of this study, and put forward the hypothesis of this research to command later chapters. Specific study as follows:Part one:To describe financial expenditure for supporting agriculture and public expenditure in rural areas. Financial expenditure for supporting agriculture was mainly financial input in agriculture; consist of agricultural capital expenditure, expenditure to support rural production and various operating expenses, science and technology promotion funds in agriculture, subsidy expenditure and other expenses. This section analyzed 1978-2007 total expenditure for supporting agriculture, the proportion of expenditure structure and the status of different subjects using description of statistical methods. Rural public expenditure was primarily financial for the cause of rural infrastructure and social spending, including public expenditure in rural transport, rural electrification of public expenditure, public expenditure on rural communications, rural water public expenditure, and public expenditure on rural education, rural public spending on health care and public spending on social security in rural areas. This part was a description of statistical methods combined with the chart on the 1978-2007 public expenditure in rural areas and rural public goods supply situation, for further empirical analysis and strategy development to pave the way proposed.Part two:To Analyze the impact of the financial expenditure for supporting agriculture on consumption of rural residents. According to the purpose of using and the different ways of funds playing a role in, the financial expenditure for supporting agriculture can be divided into two main categories of investment expenditures and subsidy expenditures. Investment expenditures were the government's investment to provide agricultural and rural public goods and services to agriculture and rural areas. Subsidy expenditures were government's subsidies for food production, agricultural inputs, and also known as conservation subsidies. Subsidy expenditures can directly increase the income of rural residents by the price subsidies or direct subsidies, while the investment expenditure was to provide public goods and services to indirectly increase the income of rural residents, provide the conditions for the consumer, reduce transaction costs, ultimately to promote the consumption. How investment expenditures and subsidies influenced rural household consumption expenditure and whose impact was greater needed to be researched using data. So this part analyzed the impact of investment and subsidies expenditures on consumption of rural residents through fixed-effect panel model. The conclusions showed that whether or not the model including income, the impact of investment expenditures on consumption of rural residents were significantly positive. Investment expenditures can directly influence consumption of rural residents and indirectly influence consumption of rural residents through influencing income. Whether or not the model including income, estimates showed that the impacts of per capita subsidies on consumption of rural residents were not obvious.The financial expenditure for supporting agriculture was divided into central and local fiscal expenditure according of expenditure subject. This section only used 1978-2006 time-series data of the expenditure to support rural production and various operating expenses on the different expenditure subjects to analyze their impact on consumption of rural residents. The results showed that the impact of local fiscal expenditure was significantly positive, and the impact of central fiscal expenditure was not significant.Part three:To analyze the impact of public expenditure in rural areas on consumption of rural residents. The livelihood issues as a separate part was listed for the first time in the report of the Seventeenth Party Congress. Premier Wen Jiabao has also repeatedly stressed the importance of social development and improving people's livelihood in the government work report. These showed that the party and government was attaching great importance to people's livelihood. SO learning from others, this study divided public expenditure in rural areas into rural infrastructure and livelihood expenditures and researched their impact on consumption of rural residents through sub-regional perspective. Rural infrastructure expenditures could increase employment of rural residents, improve the income of rural residents, to provide consumer conditions for the rural consumer. Livelihood expenditures could reduce the worries of rural residents, reduce precautionary savings of rural residents, and improve consumption level of rural residents. Expenditures for infrastructure could provide hardware support for production and living of rural residents, livelihood expenditures was able to provide software to protect rural residents living. When hardware and software supplied coordinately and consistently with the economic development level the consumption level of rural residents could be improved. The results from panel data model showed that at the national level, the impact of infrastructure and livelihood expenditures on consumption of rural residents were all significantly positive. At the regional level, the impact of the expenditure on infrastructure and livelihood of the Eastern on rural residents' consumption were positive and significant; the impact of the expenditure on infrastructure on rural residents' consumption was positive and significant in the Central and the Western of China, the impact of the expenditure on livelihood were not significant. So the hardware of Central and Western regions were still the focus of the current fiscal expenditure.Next we divided rural public expenditures into rural roads, rural water, electricity, communications, medical and social security and so on. Then we used panel-data model to analyze the impact of rural public goods on rural residents' consumption, and the conclusion was that the impact of rural road, electric power. communication, medical treatment and social security on rural residents' consumption was positive and significant, but the impact of rural water was not significant.Part four:To research the impact of the rural public goods supply on the rural residents'consumption of household appliances from the micro perspective. Macro data would obliterate many individual characteristics, so that this part used the survey data from CHNS database to analyze the impact of rural public goods on the rural residents'ownership of household appliances. This part found that the days of outage per week negatively influenced the owner of washing machine; there was higher probability of the owner of refrigerator and washing machine in the village of a cooperative medical care; the effect of TV channels on the owner of color TV was positive; traffic had positive effect on the owner of three types of appliances. These conclusions could play a role to promote appliances to the countryside.Finally, we concluded the whole article and put forward countermeasures and suggestions. According to previous theory and empirical analysis, the conclusions of this paper were summarized. Based on research findings, we put forward suggestions to improve consumption level of rural residents in the areas of the rural financial expenditure system, financial agricultural investment expenditure, expenditure on rural infrastructure, rural social spending and rural public goods supply.