The Impact Of Fiscal Expenditure Of Local Government On Urban And Rural Residents’Consumption

Throughout the economic development of China since the reform and opening-up policy, although its economic has maintained a high rate of growth, the citizen’s consumption plays a much weaker role in pulling the country’s economy than we expected in these decades. How dose fiscal spending influences resident’s spending has been an important topic for a long time. Besides, China is a big country, the regional economic are not at the same level, at the same time the consumption levels of the urban and rural citizens are so diiferent,that the dual structure in urban and rural economy is still an important situation of China which we should take into consideration.In this background, this paper studies the how the fiscal spending influences urban and rural residents’spending in different areas. On the basis of the study of predecessors’research results, this paper firstly analyzes the influence mechanism of fiscal expenditure, than interprets the trend of our country’s local government spending and the annual consumer spending by people in urban and in rural. After that, this paper looks into how the three parts of fiscal expenditure affect the people’s spending with the help of econometric tools. After that this article analysis how do the different parts of local government spending influence the resident spending with the help of econometric tools. At last, the artical brings up several local government spending’s advices on how to stimulate the spending by the people in urban and in rural. Predecessors’researches’results can be roughly divided into two categories:the fiscal expenditure will increase resident consumption and the fiscal expenditure will squeeze resident consumption. At the same time many scholars look into this question in both long term and short term and some other scholars divide the fiscal expenditures into different parts to analyze this topic. This paper theoretically looks into fiscal spending and people spending. Then this paper firstly reviews the development trends of fiscal spending and urban and rural people’s spending in different parts of China. We divide local government expenditure into the following three parts:expenditure for people’s livelihood. expenditure of economic construction and administrative expenses. At the same time, our country is divided into eastern, middle、western three regions. Study of this part finds that although the fiscal expenditure and resident consumption maintained a high growth trend in absolute value. There is still a huge gap not only in the level of fiscal expenditure but also in the resident consumption among three regions of our country. At the same time the dual structure also causes big consumption differences between the citizens of urban and rural. The results of empirical analyses show that expenditure in livelihood and economic construction increase both urban and rural residents consumption, administrative expenses increase the spending of people in urban while decrease the spending of people in rural areas. Finally, this article puts forward several adivces on how to use fiscal expenditure to stimulate resident consumption efficiently. We suggest that different region should sharp its fiscal expenditure according to its local conditions. First of all, we should further increase the people’s livelihood expenditure. Secondly, we should pay attention to the regional and structural adjustment of local economic construction expenditure. Finally, local administrative management expenditure growth should be controlled at reasonable speed.