Abstract

Fiscal expenditure is one of the most important tools of fiscal policy in macroeconomic market. The proactive fiscal policy made a great contribution to prevent economy downturn, but the problem of underconsumption has not been solved since 1998. At present, it is necessary for government to promote household consumption in the background of weak domestic demand.

The main part of this paper is start by the theoretical frame about the fiscal expenditure effect household consumption, and then it describes the present situation of Chinese household consumption and restricting factors step by step, and analyzes the financial effect and existing problems in the course of the expansion of domestic demand. On the grounds of macro perspective, the paper choose figures about 31 provinces from 1998 to 2012, using the GMM estimation method, and it starts from three perspectives such as urban-rural, regional, economy cycle, discusses the total amount and structure of fiscal expenditure's influence on household consumption based on the angle of local governments, this paper take 25 counties of F province as the study objection, the data area is in 1994-2012. Using the panel vector auto regression model to estimates the impact effect on household consumption from fiscal expenditure. On the part of the local government, the impact effect on household consumption from fiscal expenditure depends on the current economic situation. Finally, based on the analysis before, the paper put forward some policy proposals about how to promote household consumption, including increase consuming capacity and heighten consuming confidence. It analyses the topic from these angles such as to perfect fiscal expenditure structure, to adjust the distribution structure, and to strengthen the social guarantee system, etc.

Keywords: fiscal expenditure; household consumption; fiscal policy