Study On The Relationship Between Government Expenditure And Resident Consumption

Since 1998 China has fallen into the deflation, and how to stimulate the domestic demand has been the subject matter of China. Looking from recent years' domestic and aboard economic condition, the degree of the world economic globalization is deeper, the risk of the international trade market is intensified, and the international economy terms of trade and international market in China has tended to be anxious. Moreover China vast in territory, the economic development is not balanced; lives of the people change from warm and sufficient condition to well-off condition, not only the market capacity but also the future development have the very huge potential. Furthermore along with the socialist market economic system's gradual establishment, the market reforms is deeper, the domestic market further expands. Therefore the most main strength which pulls the economic growth is still the domestic demand. That is our country economic development solid foundation. In order to expand the domestic demand and raise economy, Chinese government has also taken some positive measures. From 1990 to 2005, the average rate of government expenditure's growth in our country achieves 18.08% which is higher than the economic growth rate by far. The increase of the government expenditure is good for the government to enhance the level of public goods and the service supplies, as well as enlarge the support for the infrastructure. In the case, that has improved resident's expense environment, to a certain extent has stimulated resident's expense.Under this situation, the paper has studied the influence the government expenditure structure has on the resident consumption. At first, the paper analyzes the present situation of the government expenditure and the resident consumption. Then the paper uses the econometric model to inquire into that how do the government expenditure as well as the government expenditure structure influence the resident consumption. At last, the paper proposes some policy suggestion on government expenditure to raise the resident consumption. The paper uses the latest econometric model------ panel data co-integration, adopts the panel data of 1985-2005 in our 27 provinces to analyze the influence which our country expenditure structure has on the resident consumption. The results of empirical analyses show that the marginal elasticity of the economic development disbursement is 0.023724, the marginal elasticity of the culture and education disbursement is 0.111015, the marginal elasticity of the administrative disbursement is - 0.120695. This indicates that in our country the economic development disbursement and the culture and education disbursement in the government expenditure have"to push in"the effect for the resident consumption, the administrative disbursement"to squeeze out"the effect for the resident consumption. Based on the empirical analysis, the paper proposes some policy suggestion, such as adjust the government expenditure structure, enhance the social security support, perfect the policy regime, optimize the government expenditure management, optimize government investment structure, and so on. These all can raise the resident consumption. This has an important guide effect for adjusting the government expenditure and expanding the domestic demand.