The Influence Of Fiscal Expenditure Structure On Economic Growth: Empirical Analysis

The relation between the structure of government fiscal expenditure and economic growth is always a controversial problem: Most theoretical studies indicate that the government fiscal expenditure structure acts on the economic growth, and then the empirical tests find a lot of different conclusions about the influence of fical expenditure structure on economic growth. The total amount of the government fiscal 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 between the government fiscal expenditure structure and economic growth in our country? And how did the modification of structure influence the economic growth in China.This paper comes to further study the relation between the government fiscal expenditure structure 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 fiscal expenditure is uncertain, and be relationship with tax rate, output elasticity and the structure of expenditure. More important thing is that we can find from the model that the structure of the government fiscal expenditure is very important to economic growth, even determine the effect that the government fiscal expenditure acts on economic growth. The effects various kinds of government fiscal expenditure act on economic growth are relationship with its proportion, output elasticity and its power of substitution elasticity.This paper analyzes the impact of different fiscal expenditure on real GDP per capita on the basis of status quo according to the statistics from 1978 to 2005 by the method of vectorauto-regression,the impulse response function and variance decomposition It finds out by empiricalanalysis that different expenditure has different impact on real GDP per capita. Among all the factors, the most influential one is , the second is.It finally propose some measures to maintain the economic growth as per the result of empirical analysis:fistly, we should try to imporve the proportion of total expenditure in GDP. The expenditure of social, cultural, educational development and the expenditure of economic construction should be optimized, and the expenditure of national defence should be creased, moreover, the stucture of the expenditure of administration need some modifications, more important is that decrease in proportion of other expenditure is a must.