Study On The Relationship Between Local Government Expenditure And Resident Consumption

Since 1998 our country has fallen into the deflation, how to start consumption and how to stimulate the domestic demand has been the subject matter of our country economy. Looking from recent years' domestic and foreign economic condition, the degree of the world economic globalization is deeper, the risk of the international trade market is intensified, the international economy terms of trade and international market in our country has tended to be anxious. Moreover our country 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, our country has also taken some positive measures, to a certain extent has stimulated resident's expense.Under this situation, the paper has studied the influence the government expenditure has on the resident consumption. The paper analyzes the relation of government expenditure and resident consumption theoretically, proceeds from angle of Keynesian Economics at first, Keynesian believes that the government expenditure can stimulate the resident consumption. But New-Classical Macroeconomics believes there is relation of a certain competitiveness, antagonism between the government expenditure and consumption of resident, therefore the government expenditure has certain crowding-out effect to the resident consumption.Meanwhile, this paper will also investigate the expenditure situation of local government, analyze the operation situation of the expenditure of local government from three aspects, the government's gross expenditure, the structure of the expenditure and every local expenditure situation separately; Secondly, this paper have done a simple introduction to the situation of consumption of resident of every area in the last few years in our country. Use the panel data of 27 provinces in China's Mainland, divide it into eastern, central and western part to measure analyzing the structure and relation of resident consumption, gross expenditure of local government and expenditure of government to come, combined the actual conditions finally and explained the real example result.Based on the empirical analysis, the paper proposes some policy suggestion, such as adjust the local government expenditure structure, perfect the policy regime, and optimize the government expenditure management, and so on. These all can raise the resident consumption. This has an important guide effect for adjusting the local government expenditure and expanding the domestic demand.