Spatial Econometric Analysis Of The Relationship Of The Structure Of Fiscal Expenditure And Economic Growth

The relationship between fiscal expenditure structure and economic growth has been one of the main research topics of economics. It is because fiscal expenditure is an important part of the government’s macro-control policy, it plays an important role in the achievement of the country’s stable economic growth. Whether the structure of fiscal expenditure is reasonable or not is directly related to the efficiency of fiscal expenditure and economic growth. In the period2000-2010, the average annual growth rate of China’s gross domestic product (GDP) reaches to10.48%, and total economic output increases by nearly2.71times in the11years. The rapid growth of China’s national economy is closely and inseparably related to the constantly optimizing fiscal expenditure structure.Economic growth has been a macroeconomics research hotspots, the relationship between the financial expenditure and economic growth gets more and more attention at home and abroad. Scholars have made a lot of researches, they not only make research on the effect of the total fiscal expenditure to economic growth, but also the different structure of fiscal expenditure to economic growth. However, due to the difference of the selected time sequence length, range of study sites, research methods and the structure of fiscal expenditure, scholars gets different results. At the same time, most research works in the past time considered region as a ’island’ and their mutual relationship in different regions was often ignored. In the paper, we take spatial factors into account, and make research on the fiscal expenditure structure and economic growth among31provinces excluding Hong kong, Macao and Taiwan regions from2000to2010in China on the basis of spatial correlation.According to the Chinese and foreign research, the difference of the selected time sequence range and the classification methods of the fiscal expenditure structure all can lead to the contradiction of the empirical results. There are three kinds of most common classification methods of the fiscal expenditure structure in the world, which can be summarized as follows:divided by the functions of the government as well as by the purposes and the properties of the expenditure respectively. However, the statistical standards of the fiscal expenditure of our country have changed since2007, resulting to lack of uniform classification methods to divide the fiscal expenditure of our country. So we here in this paper refer to the method of the transformation between the classification subjects of the government revenue and expenditure in2007and the old subjects in earlier years, as well as the standards by which to divide the functions of the government, to divide the fiscal expenditure of our country as follows:Agricultural expenditure、Social security expenditure、the administrative costs and the cost of culture、health、science and education. This kind of classification method can not only make up the inconvenience that the change of statistical standards has brought about, but also can make clear the degree of the influence as to the fiscal expenditure to economic growth under each classification of the functions.This article is divided into the theoretical part and the empirical part. The empirical part can be divided into exploratory spatial analysis and spatial econometric analysis. In the theoretical part, the author summarizes the research of the relationship between fiscal expenditure structure and economic growth of china and other foreign countries because of taking the spatial factors into account in the empirical part, the author also introduces the related indicators of the exploratory spatial analysis and spatial econometric model, and lay a theoretical foundation for subsequent empirical part. In the empirical part, the author makes exploratory spatial analysis of provincial fiscal expenditure structure with regional GDP in first.We use Moran’s I index and Moran scatter plots to test spatial dependence of capital GDP growth among31provinces from2000to2010in China, and find that agglomeration effect exists in China’s economic growth, and it exists spatial correlation in the provincial and municipal space, and the correlation is increasing gradually. It shows that it is necessary to take spatial factors into the research of fiscal expenditure structure and economic growth. Secondly, we base on the Cobb Douglas production function and use pooled model with spatially lagged dependent variable to analyze the spatial dependence between fiscal expenditure structure and economic growth in three regions. The results show that:the GDP among provinces exists spatial dependence in China; the cost of culture、health、science and education has the most significant affect in economic growth; Agricultural expenditure has negative affect on economic growth, and it is not significant in the central regions and western regions; the administrative costs in western regions increases too fast, it begins to hinder economic growth; Social security expenditure has positive affect on economic growth in eastern regions, but it is not significant in the central regions and western regions.The last part of this thesis is policy recommendations. Based on results of the exploratory data analysis and spatial econometric analysis in three regions, we find that it exists some differences of the influences in the three regions. The government needs employ different strategies to optimize the structure of fiscal expenditure in the three regions, adjust the various types of total financial expenditure, strengthen regional economic cooperation, and at last achieve balanced and quick development of economic. In recent years,"Document NO.1of the Central Government " is proposed to optimize the structure of fiscal expenditure, this shows that the adjustment of the structure of fiscal expenditure has become an important content of the national economic construction.