The Dynamic Analysis On Defense Expenditure And Economic Growth In China

In recent years,our country's economic construction is in the period of continuous optimization and transformation,and the international situation is becoming increasingly complex.China's neighboring countries often take all kinds of small actions that hinder the healthy development of China's economic construction,and the security situation tends to be unstable in the surrounding areas.How to ensure the healthy development of the economy under the premise of ensuring the stability of the internal and external environment,and making national defense construction and economic construction reasonable and effective towards the goal of realizing the goal of socialist modernization is a major task that our country faces.First,this paper introduces the background of the research,and it classifies and collates the related literatures about the relationship between domestic and foreign research.Then,this paper focuses on the qualitative and quantitative aspects to study the relation between defense expenditure and economic growth.In terms of qualitative aspect,on the one hand,it analyzes how the economic growth influences defense expenditure from the perspective of economic strength and broad economic environment.On the other hand,it introduces the positive and negative effects of defense expenditure on economic growth,and the influence of defense expenditure structure on economic growth.In the quantitative aspect,the paper builds the extended Feder-Ram model and introduces another new influence factor for defense spending and the national economy is divided into the defense department,the non-defense public department and the private department.Based on the data from 1982 to 1993,from 1982 to 2003,from 1982 to 2016,the paper studies the scale effect of defense department and non-defense public department on economic growth,and the externality and the trend of change of the defense expenditure on the output of the non-defense public department and private department,studies the influence of external defense expenditure on our national defense expenditure.Finally,by constructing vector auto regression model,we use co-integration test and Grainger test to analyze the causal relationship between endogenous variables,and use impulse response function and variance decomposition technology to analyze the dynamic impact between variables in depth and meticulously.The study results show that the scale effect of defense expenditure and non-defense public department output on economic growth has been positive,and the externality of defense expenditure on non-defense public department output as a whole has been negative,but the trend is weakening gradually,and the externality of defense expenditure on private department output changes from negative to positive,and to some extents external defense expenditure can promotes the increase of China's defense expenditure.And there is a two-way causality between defense expenditure and economic growth,there is a two-way causal relationship between defense spending and non-defense public department,there is one-way causal relationship from defense spending to the private department.Then by using the impulse response function,the paper analysis the influence of current value and future value when defense expenditure and economic growth,the public department,the private department and external defense expenditure get the impact of a standard error from random error term.And through the variance decomposition technology the paper quantifies the contribution degrees of disturbance terms for the error of predictive value of endogenous variable.Finally,according to the results of the study,some specific policies and suggestions are put forward.