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An Empirical Research on the Structure of Public Expenditure and Economic Growth¡ªEvidence from China

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  • Li Yang Zi

Abstract

This paper takes the relationship between public expenditure structure and economic growth as the object of study. By using evidence from China, it analyzes how the Chinese Government should promote economic growth by the optimization of public expenditure structure when facing with a decline in the growth of fiscal revenue. The main conclusions of the paper are as follows: The impact of public expenditure structure on economic growth not only depends on the output elasticity of the item of expenditure, but also on its initial share. When the initial share is oversized, it will make an item of expenditure which appears to be productive become non-productive. For China, the proportions of economic construction expenditure and administrative expenditure have a significant negative effect on long-term economic growth; the social expenditure on culture and education has a significant positive effect on long-term economic growth.

Suggested Citation

  • Li Yang Zi, 2016. "An Empirical Research on the Structure of Public Expenditure and Economic Growth¡ªEvidence from China," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 8(3), pages 85-96, March.
    • Handle: RePEc:ibn:ijefaa:v:8:y:2016:i:3:p:85-96
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    References listed on IDEAS

    as
    1. Michael Woodford, 2011. "Simple Analytics of the Government Expenditure Multiplier," American Economic Journal: Macroeconomics, American Economic Association, vol. 3(1), pages 1-35, January.
    2. Devarajan, Shantayanan & Swaroop, Vinaya & Heng-fu, Zou, 1996. "The composition of public expenditure and economic growth," Journal of Monetary Economics, Elsevier, vol. 37(2-3), pages 313-344, April.
    3. Ismael Sanz, 2011. "What Do OECD Countries Cut First When Faced with Fiscal Adjustments?," Southern Economic Journal, John Wiley & Sons, vol. 77(3), pages 753-775, January.
    4. Ismael Sanz & Francisco J. Vel·zquez, 2004. "The Evolution and Convergence of the Government Expenditure Composition in the OECD Countries," Public Choice, Springer, vol. 119(1_2), pages 61-72, April.
    5. Lynn MacDonald, 2008. "The impact of government structure on local public expenditures," Public Choice, Springer, vol. 136(3), pages 457-473, September.
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    More about this item

    Keywords

    structure of public expenditure; economic growth; economic construction expenditure; social expenditure on culture and education; defense expenditure; administrative expenditure;
    All these keywords.

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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