The Study On The Effect Of Corrruption And Public Expenditure To Economic Growth

Thirty years after reform and opening up, Chinese economy continued to maintain rapid growth, at the same time, public expenditure has also increased rapidly, and the proportion in gross domestic product in our country has become more and more large. but at the same time, the serious problem of corruption in China has gradually become the focus of attention of the whole society. Generally speaking, corruption occurs in areas of public spending, the economic level of the more developed regions are relatively low levels of corruption. China has given rise to high corruption and high growth phenomenon. The main content of this paper is to study how corruption can affect China's economic growth by the way of public expenditure.Firstly, this article analysis the corruption in our country and the status, characteristics of public expenditure, then this article analysis the influence mechanism of corruption in our country through public expenditure on economic growth in theoretically, and based on establishing the econometric model, and explore our corruption by public expenditure on economic growth. Secondly, the empirical analysis use 1994-2012 data of 31 provinces in China, through two steps empirical study to verify the hypothesis. The first step, after the Hausman test, the result indicate using fixed effects regression to verify that the impact of corruption on the public expenditure, obtains that the corrupt expanded the scale of the public expenditure, distorted structure of public expenditure.That is to say, corrupt expanded economic construction expenditure and administrative expenditure, reduce the teaching, science, health spending and the defense expenditure and the result basically consistent with the theoretical mechanism. The second step, the variables of corruption is embedded in the classic economic growth model of Barro, then the measurement method of Hansen threshold regression regression is used.The measurement results show that there are threshold effects of corruption in the influence of public expenditure and are all kinds of public expenditure on economic growth:the scale of public expenditure has double threshold of corruption on economic growth, and with the degree of corruption intensified, The effect of the size of public expenditure on economic growth are changing from promoting effect to not significantly longer inhibition. There is a single threshold of corruption in the effect of expenditure of economic construction on economic growth, when the level of corruption is low, economic construction expenditure promote economic growth, when the corruption level is high, economic construction expenditure is not significant influence on economic growth. There are two thresholds of corruption in the effect of the public health expenditure on economic growth, with the degree of corruption intensified, the effect of expenditure on education science and culture health on economic growth is changing from promoting effect to not significant influence; There is a single threshold of corruption in the effect of national defense spending on economic growth, when the level of corruption is relatively low, defense spending promote economic growth, when corruption degree is high, defense expenditure is not significant influence on economic growth. There is a single threshold of corruption in the effect of the administrative expenditure on economic growth, when the low level of corruption, administrative expenditure to economic growth was not significant. When the higher degree of corruption, administrative expenditure inhibit economic growth. Finally, on the basis of theoretical and empirical analysis, according to the effect of Corruption on economic growth through public expenditure way, and put forward the corresponding policy recommendations.