Empirical Study On The Impact Of Fiscal Expenditure On Economic Growth In Jiangsu Province

Since endogenous economic growth theory put forward that fiscal expenditure playsan important role in the economic growth, more and more economist at home and abroaddid researches on the relationship between fiscal expenditure and economy. However, theyhaven’t formed a unified conclusion and it needs further researches. China has experiencedrapid economic growth since the reform and opening up. As one of the biggest province ofChina in economy, Jiangsu province has a high growth rate in economy and fiscalexpenditure. At the same time, regional disparity becomes bigger and bigger. Therefore,making a study on the relationship between fiscal expenditure and economy in Jiangsuprovince can provide reference for further development in economy and narrowing the gapbetween regions.In this paper, both theoretic and demonstrational methods are used to make a researchon this topic. First part introduces the related concepts and theories about fiscalexpenditure and analyses the theoretic impact of fiscal expenditure on economy. Secondpart makes an analysis of status quo of fiscal expenditure and economy in Jiangsu province;in order to make a differentiate analysis between regions, Jiangsu province is divided intosouthern cities, middle cities and northern cities according to the locations. Third part is theempirical analysis based on the scale model and structure model; in order to distinguishdifferent impact of the regions, the paper makes a regression analysis of three regions. Itturns out that the scale of fiscal expenditure has a positive effect on economy; the impactof the structure of fiscal expenditure on economy is different; administrative expenditurehas a negative influence on economy of southern and middle cities, although in northerncities its positive effect is insignificant; economic construction expenditure has a negativeeffect on economy of southern and middle cities, although in northern cities it has apositive influence; social expenditure has a promoting effect on all regions. In conclusion, following solutions are suggested in this paper: adjust economic construction expenditure;reduce administrative expenditure; increase social expenditure; improve the transferpayment system.