Structure And Economic Growth In China's Fiscal Expenditure

Keynesian theory put forward that in the short term， under the condition ofinsufficient aggregate demand, government can expand aggregate demand through fiscalpolicy and therefore smooth the business cycle fluctuations and prevent the economy fromentering a downturn.Since the theory proposed, governments around the world put thetheory into practice during economic downturn. In2008, when the United Statessubprime crisis endangered the global economy, in order to avoid the impact of thedomestic economy suffered from the subprime crisis, Chinese government implementedstimulative fiscal policy, launching the four trillion investment plan. The plan did avoid theeconomic shocks in the short term, then coming apparent inflation, soaring house pricesand the status of local government debt, which leaded to heated discussion about the fourtrillion stimulus package, the issues are mainly about if the stimulus package did moregood than harm or did more harm than good, which direction would the economy goeswithout the package, whether the huge investment dominated by the government is lack ofefficiency, and whether it led to a large number of waste of social and economic resources.Correspondingly, after five years,The18th National Congress of the CPC of2013reported:"handle the relationship between government and market well and making themarket plays a decisive role in the allocation of resources and play the government rolebetter",which represents a large trend of the economic development in the future, namely ahigher role of economic marketization. The function of the government will graduallymove from economic management to the direction of public service.Under such a big economic background, the fiscal expenditure is the government toolof economic regulation through fiscal policy and a tool to provide public services forpeople, thus how to adjust its structure to make it works better and to promote economicgrowth becomes a issue worth studying.This article is divided into five chapters, the first chapter mainly elaborate theresearch background, theoretical and practical significance, and introduces the researchplan,. The second chapter introduces the historical and current research situation of theissue about fiscal expenditure and economic growth from domestic and foreign perspectiveseparately, analyzes the research methods and conclusions of different scholars on thisissue.The third chapter proposes economic growth model including the fiscal expenditurestructure on the basis of research of China’s fiscal expenditure structure changing tendencyand the effect of fiscal expenditure on the economic growth.The fourth chapter takes four data total output, all kinds of financial expenditure, capital and labor number to establisha model, and figures out the marginal contribution of fiscal expenditure on outputaccording to the annual data of1993-2005, and thus obtains the theoretical optimalstructure, and compares it with the actual fiscal expenditure structure.The fifth chapter, onthe basis of comparative analysis in chapter four, puts forward suggestions on fiscalexpenditure optimization.