An Empirical Study On The Government Expenditure And Economic Growth In Our Country

The relation between the government finance expenditure and economic growth always is a interesting and puzzled economic problem: Most theoretical studies indicate that the government finance expenditure positively acts on the economic growth, but the empirical tests find a lot of different conclusions. The total amount of the government finance expenditure increased slowly and its proportion of GDP was dropping before the middle of 1990s since reform and opening-up in our country, but the economic growth rate was very high in this period, how on earth is the relation of the government finance expenditure and economic growth in our country?This paper comes to further study the relation between the government finance expenditure and economic growth from two respects of the theoretical and empirical study. The theoretical model indicates the relation between economic growth and general quantity of the government finance expenditure is uncertain, and be relationship with tax rate, output elasticity and the structure of expenditure. Furthermore, the structure of the government finance expenditure is very important to economic growth, even determine the effect that the government finance expenditure acts on economic growth. The effects various kinds of government finance expenditure act on economic growth are relationship with its proportion, output elasticity and its power of substitution elasticity.The empirical study indicates, the total government finance expenditure has remarkable positive effect on GDP in our country; The central expenditure has remarkable negative effect on GDP, the local expenditure has remarkable positive one on GDP; Divided by economic function, the social, cultural and educational development, national defense and economic construction expenses have comparatively remarkable positive acting on to GDP, and the administrative expenses has negative effect on GDP, and the significance is relatively weak, other expenditure has the remarkable negative effect on GDP; The educational development expense acts on remarkably to GDP two year to lag behind, the scientific research expense islagging behind for one year and positive acting on GDP, but the significance is relatively weak, other cultural, healthy and sports have remarkable negative acting on GDP. Get the suggestions of the reform of government finance expenditure of our country according to theory analysis, which should namely improve the proportion of the local expenditure, reduce the one of the central expenditure; Raise proportion of economic construction, the social, cultural and educational development and national defense, reduce the one of administration expense and other expenditure; Raise the proportion of educational development, scientific research, reduce the one of other cultural, healthy and sports.