Empirical Analysis On The Relationship Between Fiscal Expenditure And Economic Growth Of Guangzhou City

China belongs to the Third World Country, so about the high-speed economic growth is concerned by the world all the time. Economic growth is one of the government's fundamental objectives of macroeconomic policies, and fiscal expenditure is the major tool of government's macro-economic operations. Therefore, It has theoretical and practical significance to research economic growth of our country form fiscal expenditure. Since Arrow and Kurz (1970) put forward fiscal expenditure into the model of production function ,and introduced endogenous growth model to research this issue creatively, scholars all over the world did some researches to verify and revise the model from different culture backgrounds and different country. However, they didn't get a unanimous conclusion.This paper is based on previous research, took fiscal expenditure and economic growth as research objective after reform and opening up in Guangzhou. Basing on VAR model, the research used Eviews software to analyze data which included 27 years from 1980 to 2006, finally got the conclusion.The article will use OLS regression to the C-D function which includes fiscal expenditure. According to the regression results fiscal expenditure will be divided into two major categories: non-productive expenditure and productive fiscal expenditure. Then this research test the different impulse impacts form the two major categories by using VAR model and the impulse response function ,we find that increase the impulse of the productive fiscal expenditure will promote the speed of economic growth. But if non-productive receive innovation impulse, it will lead to inhibit economic growth. At last ,according to the result of theory and empirical analysis, this paper analyze the effect of fiscal expenditure of Guangzhou city and point out the weak point among them ,put forward the corresponding policy recommendations.