An Analysis of the Economic Effect of China's Government Expenditure:1978-2006——Empirical Analysis about Growth Effect,Time Lag and the Test of Granger Causality

With the growing up of China's economy,government expenditure increases rapidly.This thesis analyzes the great changes of government expenditure and economic growth detailedly during the course of 1978-2006.On the basis of the study of government expenditure and GDP,the model of VAR and the theorem of Granger causality are introduced in order to testify the economic effect of government expenditure.The article suggests that the government expenditure promotes the economic growth clearly,the response of GDP to one S.D.government expenditure innovation is very puny,but the response of government expenditure to one S.D.GDP innovation is strong,government expenditure will increase 0.011 percent when GDP enhances 1 percent.The contribution proportion of GDP to government expenditure increases continuously,of which the maximum is 77 percents in the tenth year.The single directional causality exists between government expenditure and GDP in the period of 1978-2006 and China's economic growth boosts the government expenditure.