Local Government Financial Expenditure Of The Consumer Impact Of Empirical Analysis

The relationship between government public expenditure and household consumption has always been a hot issue in the theory realm, especially in China whose household consumption has been keeping down drifting. In China, the lagging domestic demand has to some extent delivered some negative effect on the macroeconomic operation and economic growth; Chinese government has respectively made some adjustment to financial expenditure in order to stimulate the domestic demand, especially household consumption. This article includes preface and four chapters. The preface shows that the main study objective is the influence of government financial expenditure on household consumption, as well as the meaning and significance of this study. Chapter one briefs relative research that has been done, both by foreign and local researchers, taking our empirical study requirement into consideration. Chapter two introduces the history and status quo of Chinese household consumption and government financial expenditure, both nationally and locally. Chapter three introduces the econometric model for empirical study and lists the empirical study results between household consumption per capita and local government financial expenditure per capita, as well as between household consumption ratio and local government financial expenditure-gross local production, by using STATA, followed by respective analysis of economic implication of the results. It is discovered that local government financial expenditure per capita indeed has positive impact on household consumption per capita, and it is the same with local government financial expenditure ratio to household consumption ratio. However, the expansive fiscal policy executed since 1998 has to some extent delivered positive impact on average household consumption, however, negative influence on household consumption ratio. It suggests that expanding local government financial expenditure indeed will result in higher household consumption, but substantial attention must be paid to improve the using efficiency of government financial expenditure; in addition, financial expansion also should go with proper reformation on social security and other relative aspects, so that government financial expenditure can stimulate household consumption not only on absolute quantity level (enhance household consumption per capita), but also on relative quantity level(enhance household consumption ratio). Respective policy suggestions are expressed in chapter four.