Effect Of Fiscal Expenditure On Household Consumption In China

With the development of market economy, the relationship between people's livelihood expenditure and household consumption should pay close attention to. Theoretically, the residents' consumption expenditure on both can produce "squeeze into effect", namely the financial expenditure can promote the growth of residents' consumption, and promoting economic growth, Also can be "extrusion effect", namely the financial expenditure may inhibit the growth of spending. Keynesian multiplier theory is that can cause consumption expenditure, and the multiple expansion effect of promoting economic growth. But new liberalism against the Keynesian school exist large differences on the question of the effect of the fiscal expenditure on consumption, although they opposed the state intervention. Many domestic and foreign famous scholars from different Angle of economic and financial expenditure on the problem of the relationship between the residents' consumption done a lot of theoretical research and empirical studies and fruitful achievements have been obtained, but there is still no definitive conclusion and unity.At present, the development of China's economy is in transition economy system reform after the key period of rapid growth, expanding domestic demand is the fundamental development of the Chinese economy, it is the real demand growth, lasting pull force. As for realistic conditions and long-term development, expanding consumer demand, on the one hand, to adjust the share of national income, and increase the proportion of household consumption. On the other hand, we should promote the construction of public finance by adjusting the structure of fiscal expenditure. And people's livelihood expenditure is the material and confident foundation of expanding consumption.Establishing to the people's livelihood financial system has become the objective need of China's healthy development of economic society, and become the influence factor of residents' consumption psychology and consumption tendency. Therefore, the study of effect of fiscal expenditure on household consumption in Chins is the objective requirement of the economic system reform, which has very important theoretical and practical significance to ensure the effectiveness of fiscal policy regulation and the adjustment of economic structure.Combined with China's actual situation and draw on the research based on the results, this essay empirically anaylises the transmission effects exerted by fiscal expenditure for people's well-being on consumption through the actual data from 1978 to 2006. The results of the different approaches indicate that finance outlay regarding people's livelihood has a obviously positive impact on household consumption. And consumption did not play its due promotion function on GDP. All these illustrate that with fiscal outlay inclined towards the filed of people's well-being, the domestic needs as well as economy can be effectively stimulated, while on the contrary, the consumption together with the development of national economy will be hindered.Based on the conclusions,concerning the current situation of fiscal expenditure, the essay gives some brief proposals on policy.