Research On The Relationship Between The Fiscal Expenditure And Private Consumption Of Gansu Province

Since the Financial Crisis broke out in 2008,accompanied by the sluggish investment and the shrinking exports,the problem of insufficient domestic demand becomes increasingly prominent.As the economic growth and the consumption growth are always close linked,in order to obtain great power of economic growth,we must further expand consumer demand.As an important means of local government economic regulation,financial expenditure should play its due role in resolving the different difficulties faced by the consumer and improving the consumers' spending demand or other aspects.Take Gansu Province as an example,local fiscal expenditure is an important part of social resource allocation,the size and structure of financial expenditure is directly related to the effectiveness of our provincial resource allocation,directly or indirectly affects the economic development and social welfare situation of the whole province,regulating for the dynamic equilibrium between the economic development and the residents' consumption.Therefore,it is necessary to do further research and discussion about the relationship between Gansu Province financial expenditure and household consumption so as to propose policy recommendations to let Gansu Province's fiscal expenditure better play a catalytic role in residents' consumption.In this paper,based on the theory of financial expenditure and thetheory of household consumption as well as the theory of the relationship between the financial expenditure and the household consumption,firstly,it makes a present situation analysis of financial expenditure and residents' consumption of Gansu Province.On this basis,it makes a further analysis of the reason and effect of the consumer's consumption lack of Gansu Province,and describes the status of the relationship between financial expenditure and residents' consumption.Then it builds models based on the Multiplier Theory and Public Finance Theory,revolve the relationship between financial expenditure and residents' consumption of Gansu Province to make a regression analysis,and ultimately puts forward the following conclusions: First,the total amount of financial expenditure has a crowding-into effect on household consumption,but the total financial expenditure share of GDP has a crowding-out effect on household consumption.Second,economic construction expenditure,administration and defense expenditure have a crowding-out effect on household consumption,but science,education and social security expenditure have a crowding-into effect on household consumption.Third,the consumption of urban and rural residents play a positive role in promoting the fiscal expenditure,and the level in promoting fiscal expenditures of urban residents is significantly greater than rural residents.Based on the above empirical analysis conclusion,according to thepresent situation of Gansu Province,the recommendations of fiscal expenditure policy to promote the consumption of residents in Gansu Province are made by the author as following: Firstly,it is the total financial expenditure policy that control the size of fiscal expenditure within reasonable limits.Secondly,it is the structure of fiscal expenditure policies,including as maintain the current scale of economic development expenditure,increase the financial support for science and education,control the scale of administrative expenditure,improve efficiency in the use of social security expenditure,perfect the existing social security system.Thirdly,it is other supporting policies that related to the financial expenditure to promote the consumption of residents in Gansu Province.