Innovation Model Of Public Expenditure Based On The Endogenous Economic Growth Theory

Public expenditure, which is a most influential factor, has very important meanings of keeping economy increasing fast continuously. Research on the relation between the public expenditure and economic growth, which is a main foundation to optimize the structure of public expenditure, advance the benefit of public expenditure.Firstly, this paper introduces endogenous economic growth theory, which was born in the Knowledge-economy era, and its expenditure policy meaning. The core thought of this theory is that the long-term economic growth is explained by human capital, technical progress and other endogenous factor. All these variables are sensitive to government's expenditure policy. This has offered theoretical foundation for government accomplishing something in the modern economic society. And then this paper puts public expenditure be the endogenous variable of economic growth, then makes up two theoretical models of endogenous economic growth. And finds that there is an optimization scale of public expenditure, and also has an optimization proportion of public expenditure to total expenditure.Then this paper has reviewed historical change of economic growth and the public expenditure of China briefly, and then makes an empirical analysis on the relations between the scale and the structure of public expenditure and economic growth, and finds that government's expenditure obviously promotes the economic growth, but the function on the economic growth of expenditure is not the same in each part of the expenditure.At last, according to the result of theory and empirical analysis, this paper designs the innovation model of public expenditure, which consists of one centre and two basic points. And the centre is advancing human resource. Two basic points are strengthening human capital investment and paying attention on knowledge spillover effect. While the conditions of innovation model are putting forward the corresponding government's transformation, reforming the function on the public expenditure between central and local government, maintaining the public budget superintendence.