The Research Of The Correlation Between Public Expenditure And Economic Growth In The Framework Of Endogenous Economic Growth Model

The difference of the real income between nations is correlative with social welfare indexes such as life expectation, level of education of a country, infant mortality rate, level of nutrition and so on tightly. Economic growth induced increase of monetary income per capita can improve the condition of social welfare under the premises of controlling factors other than economic growth that affect welfare condition. Therefore, the importance of welfare outcome of long run economic growth is more manifest than the possible outcome of short run fluctuation in macroeconomics. This thesis have analyzed the relationship between public expenditure and economic growth under the frame of endogenous economic growth model, investigating the mechanism of public expenditure's influence on economic growth from aspects of human capital formation, technology improvement formation and public capital formation respectively. The thesis have also put the efficiency of public expenditure into endogenous economic growth model and take econometric analysis on the correlation of public expenditure and economic growth considering the lag effect of time series data. The estimation and calculation about the time series data of public expenditure and economic growth of our country manifest that public education expenditure, public research and development expenditure and infrastructure expenditure correlative economic growth positively. It is necessary for our country to expand public research and development expenditure and optimize the structure of public education expenditure. International comparison analysis manifest that human capital and technology improvement have fundamental effect on economic growth by enhancing the marginal product of capital. The result of regressing economic growth on out budget public expenditure manifest that out budget public expenditure influenced economic growth negatively by inducing unproductive rent seeking behavior and blocking the formation of public capital, human capital and technology improvement.To strengthen the effect of public expenditure projects to economic growth to the largest extent, the fiscal department of our country should expand education expenditure and research development expenditure, optimize the structure of the expenditure, improve the efficiency of administration management expenditure, perfect the reform of budget management system, establish the motivation and obligation mechanism of civil servant, put every expenditure project to cost andbenefit evaluation, supervise and audit the projects in the process of public expending on the basis of establishing the general public expenditure police framework that can advance the economic growth and economic development.