The Fiscal Expenditure Structure And Regional Economic Growth

Generally speaking, the structures of fiscal expenditures include three aspects as follows:the first one is the ratio of the fiscal expenditure in different projects, fiscal decentralization and government transfers. One region’s economic growth is not only associated with the total amount of fiscal expenditures, but also determined by the structures of them. To describe the mechanism of the structures of fiscal expenditures influence on the regional economic growth, we should build a complete model to discuss how the structures of fiscal expenditures determine the economic growth rate, and combine empirical data to explain the influences of the structures of fiscal expenditures on the economic growth.Based on the former researches, this paper sets up a dynamic optimization model of the structures of fiscal expenditures and economic growth within one level of government to discuss how the economic growth is determined by the different distributions of the fiscal expenditures on the different projects, which is proved to be a crucial variable of determining economic growth. It can be also proved that the optimal structures of fiscal expenditures exist, and any biased of them will lead to the loss of economic growth rate in different level. Then, this paper sets up a model of the structures of fiscal expenditures and economic growth within two levels of government, and introduces fiscal decentralization and government transfers into it to analyze their effects to the regional economic growth. We prove that it exist an optimal level of fiscal decentralization to make sure the maximization of the regional economic growth. Deviated the optimal level of fiscal decentralization, the both over fiscal decentralization and centralization will have negative effects on the economic growth. Meanwhile, fiscal decentralization will widen the gap among regional economic growth. Besides, this paper proves that the fiscal transfers from the central government to the local governments will not only influence the national economic growth rate, but also adjust the gap among regional economic growth by effecting the choosing of the local tax rate.Next, this paper tests the influences of the structures of fiscal expenditures through econometric methods using the time series of1954-2011and the panel data of1994-2011of China. We get the conclusions that the three variables of the structures of fiscal expenditures including the distributions among different projects fiscal decentralization and government transfers widen the gaps among regional economy in different time intervals and in different degrees.Above all, it is very important to make the structures of fiscal expenditures be optimal for the national economic growth and narrowing gap among regional economic growth by mastering the rules of the structures of fiscal expenditures and economic growth.