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

Li Yang Zi

International Journal of Economics and Finance, 2016, vol. 8, issue 3, 85-96

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.

Keywords: structure of public expenditure; economic growth; economic construction expenditure; social expenditure on culture and education; defense expenditure; administrative expenditure (search for similar items in EconPapers)
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:ibn:ijefaa:v:8:y:2016:i:3:p:85-96

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