Effects of Fiscal Expenditure Policy to Expand Domestic Demand——Based on the Framework of VAR Model

Since the outbreak of the US subprime crisis,the world economy has been facing the problem of how to get out of depression.Under the impact of subprime crisis,economic recovery in the United States,Europe,Japan and other major economies is weak and the prospects for economic recovery is unknown,thus hitting China's effort to expand its foreign demand market,which highlights the active role of expanding domestic demand in stimulating China's economic growth.Among three factors for economic growth,compared with investment,net export,domestic demand is considered to have a continuing role in promoting economic growth.As an important instrument of macro-regulation,fiscal expenditure policy is essential for expanding domestic demand.Based on the theoretical interpretation of the mechanism of fiscal expenditure to expand domestic demand,the paper empirically analyzes the contribution of consumption and investment to economic growth and points out that the contribution of consumption is significantly greater than investment.Thus,from the perspective of fiscal expenditure,the paper puts forward the policy orientation of expanding domestic demand under the premise of accelerating the transformation of economic development pattern.