On the Rural Public Expenditure,Agricultural Infrastructure Investment, and the Income Gap between Urban and Rural Areas

According to the data from 1978 to 2006,we establish vector auto-regression model to test the long-run equilibrium relationship between rural public expenditure,agricultural Infrastructure investment and urban-rural income gap.On the premise that co-integration relationship exists,we test their granger causality and analyze their dynamic relationship by impulse response function.The empirical results indicate that rural public expenditure and agricultural infrastructure investment had contributed to reducing the income gap between urban and rural areas,and the latter played a more important role.