The Empirical Research Of Chinese Government Expendture Policy

Economic reform began in 1978 is a transition from a planned economy to market economy, and it is the reform of value orientation to establish a socialist market economic system.In theory, the basic path of market-oriented reform is the Government's intervention in the economy will be relatively reduced, at the same time, the market' regulation in the economy will be relatively increased. Facing the reality of transition China's transition, it seems that the Government's intervention in the economy is quite frequent, and the scale of intervention is more and more large. Since 1992, the government spending and government revenue growth has been faster than GDP growth.Especially from 2003,the government spending growth has been not only faster than GDP growth, but also faster than government revenue growth.What caused the.separation of theory and reality? People can have multiple conjectures.Under the premise of economic theory, the author wants to know the reason that the government adopted government spending policy time and again is that it had to use more government intervention because of the more and more serious market failure or that the effect of government spending policy was especially evident. In other words for the latter, can we think that government spending policy in our country has a relatively good results, which makes more extensive use of it?In order to study the question above,besides introduction, which is the author raises a question based on the reality and existing research and literature,and conclusions, this paper includes 4 sections which are chapter three, chapter four, chapter five, and chapter six respectively. On the basis of comparing and giving some opinions about several basic models, the third chapter chooses Tom hicks-Hansen model which is mature and common as empirical study model.According to Tom hicks-Hansen model, the fourth chapter not only screens some variables as far as be concerned income, interest rate, exchange rate, price index, investment, consumption, net exports and monetary in transitional period, but also sets some econometric functions for the related mathematical relation so as to lay a foundation of model establishment. On the basis of the previous chapter, the fifth chapter makes the data processing and testing about these variables above, and makes use of econometric software to estimate the Chinese hicks-Hansen model of the transformation period. Further, the sixth chapter calculates Keynesian effect, Multiplier effect, and Extrusion effect of government spending policy of our country. At the same time, this chapter analyzes the main factors of influence of these effects.The empirical research shows that the Keynes effect of government spending policy in China is not obvious, the extrusion effect of government spending policy is weak, so the multiplier effect of government spending policy is also weak. Therefore, since the transitional period, our government has used government purchase policy more frequently not because that the effect of government spending policy is good.Considering the whole paper, the author's analysis is new in several aspects. Firstly, the author estimates the Keynesian multiplier of the government purchase for 1.9, the policy multiplier of the government purchase for 1.78 and the extrusion effect of the government purchase for 0.12.Secondly, the author estimates the marginal propensity to consume for 0.4540, the marginal propensity to invest for 0.3775, the marginal propensity of import for 0.3564, the elasticity of investment to rate for 14.799, the elasticity of currency demand to income for 0.5947 and the elasticity of currency demand to rate for 239.2756.Thirdly, this paper explains the main reason of low multiplier effect is that both the marginal propensity to consume and the marginal propensity to invest are lower, while the marginal propensity of import is higher. Although the elasticity of investment to rate, the elasticity of currency demand to income and the elasticity of currency demand to rate also has an affect of multiplier effect, the comprehensive contribution of these factors is smaller. Fourthly, this paper proofs that the reason that the government adopted government spending policy time and again is not that government spending policy in our country has a relatively good results, there must be other reasons the author need to know for further. Of course, there exist many deficiencies. For one thing, the author basically use the comparative static analysis, does not join the dynamic factors in this paper. For another thing, due to the availability of data, the author only makes the econometric research based on the annual data from 1978 to 2008,which less sample data may affect the empirical results.What's the most is that this paper can not explain the reason of the large-scale use of government spending policy in the transitional period.