China Defense Expenditure And Other Expenditure Relations Based On The TVP-VAR

National defense is a kind of pure public goods and defense expenditure is also the part in public fiscal expenditure. Defence expenditure is intended to establish the modernized military forces, to proctect national security and sovereignty against violation. Since ancient times, as long as a country was established, the first consideration is to build certain power and econimic strength for defense against foreign enemy invasion, to guard the safety of all members of the whole country.Therefore, it is a must to set up the army and build military facilities, and defense expenditure, with other public finance expenditure also constitutes the basic fiscal expenditure of a country. However, recent years, China’s defense expenditure has aroused more attention, and foreign media even took advantage of the topic of China’s defense expenditure and intentionly preached" China theart theory". In memory of the Chinese people’s 70 anniversary of the victory of the Anti-Japanese War and the world anti-fascist war meeting, Xi Jinping, also the general secretary of the CPC central committee and chairman, delivered an important speech and announced that China will cut its army of 300000.Besides, the growth of China’s defense expenditure remains the lowest in recent five years, which makes the issue of defence expenditure hot news.At the same time, such issues as how to rationally realize the allocation of public financial resources, to improve the efficiency of public expenditure, to support the national defense steadily but does not affect the development of civilian economy sectors have become major concerns of Governments around the world.Relevant experts and scholars had launched heated discussion and in-depth research on For this issuses from the perspective of relations between defense spending and economic growth and defense spending scale structure, which have obtained fruitful results. However, most of these researches started from the defense spending’s allocation of resources and efficiency but ignored the interaction between the defense expenditure and other expenditure. There is no doubt that of the study the misuse or promotion between defense expenditure and other expenditure is of great significance to achieve a reasonable allocation of financial resources and to obtain the coordination between national defense construction and the social economy development.This article will study the interrelationship between defence expenditure and other fiscal expenditure with the data of public expenditure from 1978 to 2006. From the perspective of finance, by using TVP-VAR model analysis of qualitative research methods, this thesis will examine defense expenditure,economic construction expenditure, education and health spending, administrative expenses and make impulse response analysis, to explore the relationship between the four variables. It is hoped suggestions on defense expenditure can be made on basis of the study.