Measurement Of Empirical Analysis On Government Spending And Economic Growth

At present, by the 2008 financial crisis, the economic environment in China is extremely complex and the situation of foreign trade is difficult. Appreciation pressure of RMB is increasing. The Government has accordingly adopted the investment of 4 trillion to stimulate domestic demand and other economic policies. But whether the effect of the government expenditures can be sustainable and whether there is crowding-out effect to private capital, it is needed to considerate comprehensively. But with labor costs, land or house rent and resource raw material prices rising, China's economic development may face a potential risk test of "stagflation".The empirical analysis of the long-term relationship between national (regional) government expenditure and economic growth can be better for the choice to intensity of fiscal policy, and help the Government to carry out integrated regulation to promote economic growth pattern, so there are theoretical and practical significances.This paper uses VAR model of vector auto regression, and the object of empirical analyzing is the data of 43 countries and regions from 1985 to 2006. Ram (1986), Lin (1994) and Engen and Skinner (1992) two-sector model in the endogenous growth theory is the framework. And using GMM estimator (Generalized method of moments, GMM) proposed by Arellano and Bond (1991) test empirically the linear model relationship between the economic growth and government expenditure and consider the non-linear relationship between the economic growth and government expenditure in different scale of government expenditure under the type of government expenditure. In this paper the 43 countries (areas) were divided into two groups,16 developed country countries (areas) and 27 developing countries (areas), to explore whether the results of empirical analysis among countr ies (regions) of different levels of economic development are differential. Meanwhi le, the type of government expenditure scale will be divided into two parts, the larger size and the smaller size, in order to explore whether there is a non-single relation between government expenditure and economic growth under different government expenditure scale.The conclusions of empirical analysis in the paper are as follows:When we set the economic growth and government expenditure as a linear model, in all countries (regions) and developing countries (regions), there is a negatively relationship and significantly between the economic growth and government expenditure, negatively but non-significantly in developed countries (regions); When we set the economic growth and government expenditure as a non-linear model, in all countries (regions), the developed countries (regions) and developing countries (regions), there is a relationship of Non-linear Laffer Curve."The type of government expenditure scale" is one of the key factors to impact the government expenditure and economic growth. According to the conclusions and the actual situation of our country, the paper suggests that we should keep the scale of government expenditure in a stable size, adjust the national income distribution structure. And meanwhile, it should be paid attention to the supplement affection of non-government expenditure and to stimulate the enthusiasm of private capital.