The Composition Of Local Public Expenditure And Region Economic Growth Under Tax Assignment System In China

This paper makes a study on the following questions: Under tax assignment system, what impacts did the changing composition of local public expenditure make on the region economy growth? What is relationship among composition of central and local public expenditure and region economy growth? The goal of this study is to get and verify the relationship between composition of local public expenditure and region economy growth, through constructing mathematical economic model and econometric model. Therefore, there are three sides of the content in this paper: the first is that we get the relationship among composition of central and local public expenditure and region economy growth by combining tax assignment system with the mathematical frame of public productive expenditure ; the second is that this paper constructs the basic econometric model according to the production function in the mathematical frame, and makes use of the technique of panel data and spatial econometric to study empirically the relationship between composition of local public expenditure and region economy growth in China after the reform of tax assignment system.; the third is that this paper makes a policy suggestion for local government according to the conclusion in order to construct a harmonious society. The study of this paper has two sides of significance: on the one side , the theoretical significance is to combine tax assignment system with the theory frame of public productive expenditure, and to get properties of relationship among composition of central and local public expenditure and region economy growth.; on the other side, the practical significance is that we can know about deeply the correlations between the composition of local public expenditure and the region economy growth, and the cause of the correlations , according to the theoretical conclusion and positive evidence ,so that we can provide the theoretical and positive references for local government.This paper has seven parts : Partâ… is introduction which is to point out the question of this paper , and to analysis time background of the question, and to describe the significances, goals and methods of the study. Partâ…¡is literatures review, the major content has two directions, on the one hand, the theoretical literatures review start from the carding of literatures of fiscal decentralization, fiscal expenditure and public productive expenditure theory, following the line of two sides' impact on economic growth, finding the breakthrough point of mathematical study, laying a solid foundation for the mathematical study of this paper. On the other hand, the empirical literatures review start from the carding of literatures of fiscal expenditure composition and economic growth, to find the breakthrough point of positive study. Partâ…¢is the mathematical economic analysis of composition of local public expenditure and region economy growth under tax assignment system , the major content is to set forth mathematical hypothesis, and to construct the theoretical frame , and to get the conclusion through theoretical derivation for verifying hypothesis. Partâ…£is comparative analysis of regional macro-economic data before and after the reform tax assignment system, the major content is to make a statistical analysis of macro-economic data before and after the reform of tax assignment system, by the methods of static comparative analysis and dynamic data structural change , in order to decide whether there are changes of macro-economic data before and after the reform of tax assignment system , and what is the change. Partâ…¤is the econometric model of composition of local public expenditure and region economy growth under tax assignment system , the major content is to construct basic econometric model , to make panel data tests which are including Granger causality test, panel unit test and panel co-integration test and Hausman test, lastly to get the conclusion of panel data model estimation. Partâ…¥is the spatial econometrics model of composition of local public expenditure and region economy growth under tax assignment system, the major content is to construct the spatial econometrics model , to make spatial dependence tests, and lastly to make the analysis of spatial econometric model estimation for the conclusion, and to provide local public finance policy advice according to the conclusion.Partâ…¦is conclusion , the major content is to make a summary of the study about content, process, methods and conclusion .The following are conclusion of this paper. The property shows that what makes particular components of government expenditure productive does not depend on the sign of the exponent in the production function. Rather, it is a relatrionship between the coefficient and the actual share in the budget which determines whether or not a component is productive. There is a mutual complementation the relationship among composition of central and local public expenditure and region economy growth, and it is the complementary composition between central and local public expenditure, which makes them positively related with region economy growth.