Research On Resident Income's Impact To The Size Of Fiscal Expenditure

As the preference for public goods is different among people with different income levels, thus, with the growth of the residents'income, the public demand for the public goods with chance accordingly. This kind of change will lead to the change of the size of fiscal expenditure, which is one of the main factors that should be considered during the construction of a fiscal expenditure pattern oriented by people's livelihood. This paper tries to analyze the impact of the residents'income on the size of fiscal expenditure since the reform and openness of China in three aspects:firstly, this paper divides the fiscal expenditure into three kinds with different characteristics, and analyzes the logic relations between the fiscal expenditure and the residents' income; secondly, this paper analyzes the current situation of the absolute and relative size of fiscal expenditure, and contrasts it with the increase degree of the residents' income, then analyzes the elasticity of the fiscal expenditure to the residents'income; thirdly, by using the panel data of 29 Chinese provinces/municipalities between 1978 and 2008, this paper tries to research on the impact of the increase of residents' income on the fiscal expenditure empirically in three levels:the whole country, different regions and different projects. The results show that, after the reform and openness of China, the size of fiscal expenditure is truly related to the residents' income, but the impact is different between the city and country sides, and there is also big difference among the eastern, middle and western regions of China. Meanwhile, the impact of residents'income on fiscal expenditure of the pure-public goods is quite small, and the impact on fiscal expenditure of the quasi-public goods need to be improved, and the impact on fiscal expenditure of the pure-private goods is positive and dramatics. At last, this paper gives related policy suggestion on the people's livelihood oriented progress of the fiscal expenditure according to the theoretical and empirical results.