A Study On The Relationship Between Urbanization And Fiscal Expenditure Structure In China

After the implementation of the fiscal decentralization in 1994, local government has fiscal autonomy. For speeding up the process of local urbanization, local government can control the fiscal expenditure project reasonably, according to the basis of local condition. Therefore, based on the fiscal decentralization system, how to understand accurately the dynamic relationship between urbanization level and fiscal expenditure structure is an important issue which needs to be solved urgently. Through the study of this paper, it has a certain theoretical significance for both deepening the understanding of the dynamic panel model, developing and enriching this research area, and is good for the reform of our fiscal decentralization and adjusting the structure of fiscal expenditure system, accelerating the pace of urbanization, changing gradually the situation of urbanization in our country which still lags behind the developed countries, promoting the sustainable development of economy and society in China, and achieving the overall goal of socialist modern construction.This paper inspects the dynamic relationship between urbanization and fiscal expenditure structure in China by using dynamic panel model. First, this paper expounds the general dynamic panel model theory, and introduces the generation, development, assumptions, identification and estimated method of PVAR model. On this basis, this paper selects the 1994-2012 panel data of 29 provinces in China, tests the model by panel cointegration and causality theory of the dynamic panel model. On the basis of qualitative analysis, then,under the fiscal decentralization, this paper analyses quantitatively the relationship between our country urbanization and fiscal expenditure structure by estimating the model with GMM estimation. In addition, through GMM estimation, the impulse response function and variance decomposition of PVAR model, this paper further studies the fiscal expenditure structure and the urbanization level of the impulse response direction and degree of each other.The research conclusion shows that:1. There is a long-term equilibrium relationship and bi-direction causality among urbanization, fiscal expenditure structure and fiscal decentralization.2. The development of urbanization is mainly influenced by itself, but the influence will be diminished gradually.3. The fiscal decentralization brings the imbalance of fiscal expenditure structure, the fiscal expenditure inclines to economic construction expenditure and social security expenditure in the urban process, and reduces the science-education-culture-health expenditure.