Study On The Mechanism Of Impacts Of Fiscal Policy On Economic Growth In Our Country

This article described and analyzed the Mechanism of Impacts of Fiscal Policyon Economic Growth in our country based on theoretical and empirical angles. Intheory description section，we mainly refers to "Wagner’s law", Keynesian theory ofeconomic growth and fiscal policies, endogenous growth theory and fiscal policy,exogenous growth theory and fiscal policy. In this part, I mainly discuss theinteraction between fiscal policy and economic growth, and focused on QualitativeAnalysis. Secondly, I based on VAR models and MS-AR model, took GDP, fiscalspending, CPI and M2from the first quarter of1996to the fourth quarter of2013years’ quarterly growth data for empirical research, I analyzed GDP growth and fiscalexpenditure data, and described its development patterns and trends. Then, weverified whether the selected variable fit for building conditions of VAR models, ifthe answer is positive, the through the establishment of a VAR model I can doimpulse response function analysis, variance decomposition and Granger causalitytest to study each variables Interactive relationship, mainly focusing on theMechanism of Impacts of Fiscal Policy on Economic Growth in our country. Thirdly,according to the MS-AR model I divided the system into high volatility district andlow volatility district to exploring the effectiveness of fiscal policy in different areas.Finally, under the two-district system I use least squares regression to observe onwhat level fiscal policy may impact on economic growth, and combined with actualsituation, try to discussed tthe Mechanism of Impacts of Fiscal Policy on EconomicGrowth in our country.I concluded that Wagner’s law" is fit in our country, that is, when the nationalincome increase, a greater proportion of fiscal expenditure will grow. In short term,positive fiscal policy can contribute to economic growth; while In long-term, positive fiscal policy’s stimulation effects does not obvious, in Contrary, it will cause inflation.And I also found that positive fiscal policy is Applicable in the higher volatilitydistrict, but we should not use it in long-term, soundness fiscal policy is Applicable inthe lower volatility district.We recommended that during the fiscal policy implementation process weshould try to maintain government spending and GDP in a certain proportion, seizingthe opportunity to convert between positive and soundness of fiscal policy, and wecan use monetary policy to supply fiscal policies when necessary in order to eliminatethe negative effects. We should also remember the amount of the fiscal expenditurecould not represent the full fiscal policy,we may try to analyze fiscal policy inmulti-angle, including preferably outside the budget and institutional balance ofpayments can also be taken into consideration category. We may try to alleviate thetax burden and make efforts to promote tax reform, adjust the direction of transferpayments, expenditure structure to improve government finances, improvelow-income consumers’ disposable income and other means to improve the system offiscal policy, only in those way can China’s economy maintained steady growth.