The Empirical Study About Impact Of Fiscal Decentralization On Consumer

In order to prompt the financial motivation of local government, augment the local government's fiscal authority, strengthen the competition regime among local governments, our authority has carried out the revolution of fiscal decentralization since 1994. This revolution makes the proportion of local fiscal expenditures among our total fiscal expenditures from 45% in 1981 up to 73% in 1996. The fiscal regime shows the obvious trend of fiscal authority decentralization. The decentralized fiscal regime does also increase the provincial GDP growth rates, and prompt our national economic development. At the same time, after our economic soft landing in 1996, macro economy situation changed obviously: aggregate demand kept low for a long time and marginal propensity to consume kept going down. Under this situation, our government took expansionary economic policy. Even though the social investment has been improved to some degree, aggregate demand still keeps low. So, our fiscal expenditures and the consumption deficiency has shown successive and correlate relationship after fiscal authority decentralization. Thus, the proportion of local fiscal expenditures keeps increasing while consumption level keeps being low, is it a coincidence or a certainty? So the theoretical and empirical analysis on the relationship between consumption and fiscal decentralization under competition regime among local governments is our important issue.This thesis and empirical analyses the impact which the fiscal decentralization imposes on consumption from positive viewpoint under competition regime among local governments, hoping it could be helpful for our government to make policy. For the time being, with the development of econometrics, economic research transfers its emphasis from cross-section data and time series data to panel data, moreover, the limitation of traditional least square method can not meet the demand of econometric models. So we take unit root test for panel data, co integrated test for panel data, GMM and other econometric methods to put the effect of local fiscal expenditures on consumption into positive test, based on the panel data of our 31 provinces during 1995 to 2008. We get this result: the fiscal expenditures has a positive effect on consumption after fiscal authority decentralization, but it also indirectly lower our consumption level by enlarging the poor-reach gap, distorting government expenditures structure and augment the expectation of inflation. At last, we put forward policy advice according to our positive analysis.This thesis includes five parts. The first part is preface which introduces our subject's background, the summarization of researches home and abroad and this theoretical and practical significance. The second part is the analysis of the current situation about our fiscal expenditures and consumption. This part introduces the procession of our fiscal regime revolution, the expenditures structure and the current situation of our consumption. Thus,we can better understand the current and comprehensive situation of our fiscal expenditures and consumption. The third part introduces the theory about fiscal expenditures and consumption based on previous studies, then we put forward the academic model about fiscal expenditures and consumption as preparation for the following positive part. The fourth part is the positive analysis of the effect fiscal expenditures imposed on consumption, including data recourse, processing data, method and the positive result, and robustness tests were carried out. The fived part is conclusions and policy recommendations, according to our positive analysis and the current status of the consumer ,we put forward our fiscal suggestion on how to increase consumption.