Study On The Consumption Effect Of Local Fiscal Expenditure

Since China's economy has entered a new normal,major economic indicators have shifted sharply.Economic growth has slowed to a medium-high speed,and the rise in operating costs of firms has led to a sharp decline in profits.At the same time,although domestic investment has declined,it is far less dynamic than it used to be.In addition,the downward pressure on the economy continues to increase,and the economic structure no longer adapts to the current mode of economic development,and the domestic demand is severely deficient.Based on this background,since 2015,aiming at the serious mismatch between supply and demand,the country launched to go "inventory,production capacity,to leverage,cost reduction,and fill the short board" as the primary task of structural reform of the supply side.While supply-side structural reform is focused on supply-side reforms,the reforms will no longer make sense if there is no way to reconcile supply and demand.However,China's total domestic demand has been seriously insufficient for a long time,and consumption as an important component of China's domestic demand is crucial to the expansion of China's demand.In recent years,the fiscal policy has become an important choice when government carry out macro-control measures,and the fiscal expenditure as the important tool of fiscal policy always plays an important role in our country and it will exert a direct or indirect.Influence on the residents' consumption level of ascension.In addition,the study also found that the effect of local fiscal expenditure on household consumption is more direct and effective than that of central government expenditure.Based on this,the article will further explore the relationship between residents' consumption and the fiscal expenditurebased on three perspective of local fiscal expenditure including the scale of the fiscal expenditure and structure of fiscal expenditure as well as fiscal expenditure fluctuations.In this paper,we use the related data of 31 provincesof 2000-2014 in our country as the research sample.we make empirical test of the relationship between the residents' consumption and fiscal expenditure by building a variety of panel data model and vector autoregressive model(PVAR model),which respectively based on the national level,regional level and the level of each part.According to the test results,we come to the following conclusions;(1)The local fiscal expenditure scale and the residents' consumption in China present a significant positive correlation between,from regional and urban and rural level,the local fiscal expenditure to all regions and urban and rural residents' consumption have positive influence,among them,the influence on the western region is the largest,followed by the central and eastern regions.Compared with the urban areas,the increase of local fiscal expenditure has a greater impact on the residents' consumption in rural areas.(2)In various part of local fiscal expenditure in China,there is a positive correlation between investment expenditure and public expenditure and consumer spending,while there is a negative correlation relationship between residents' consumption and nonproductive expenditure.In addition,the structural components of the fiscal expenditure structure still have strong regional and urban-rural differences in the consumption of residents.For specific performance,in terms of regional level,the increase in investment expenditure has no significant influence on improving the level of consumption of various areas,the increase in nonproductive expenditure could suppress the increase of residents consumption level,while public expenditure exert a positive effect on the residents consumption.In addition,the inhibitory effect of nonproductive expenditure is more significant in the eastern region,the promotion of public expenditure on residents' consumption in western region is obviously stronger than that in the central and eastern regions.As for the differences between urban and rural areas,investment spending effect is not significant,consumer spending on urban and rural residents' consumption will produce adverse effect,the impact of public expenditure shows the negative effect on the residents' consumption.In addition,the impact of nonproductive expenditure andpublic expenditure on rural residents' consumption were higher than in urban areas.(3)The volatility of local fiscal expenditurepresent a negative effect on residents' consumption,the increase of the amount of fluctuation in fiscal expenditure will inhibit the increase of residents' consumption,and this inhibition in the eastern,central and western region is still relatively significant.From the perspective of urban and rural areas,although the fluctuation of fiscal expenditure has a strong negative effect on the consumption level of urban residents,the impact on rural areas is not significant.Finally,based on the above conclusions,this paper puts forward some suggestions to optimize the effect of fiscal policy in China.