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Fiscal Classified Expenditure and Supply-side Structural Reform:In the Case of China’s Western Regions
Pages: 11-20
Year: Issue:  6
Journal: Journal of Xiamen University(Arts & Social Sciences)

Keyword:  fiscal classified expendituresupply-side structural reformsPVARGMMthreshold effects;
Abstract: In November 2015,the Central Committee of the Chinese Communist Party laid down the strategy of supply-side structural reforms. With the "identifying growth areas"part of the strategy as the point of departure for our analysis,this paper is focused on the expenditures of China’s western regions. We employed data on 84 prefecture-level cities from2004 to 2013 and used the method of the VAR Model to study the relationship between the fiscal classified expenditure and economic growth. Results showed that the fiscal expenditure was the cause of economic growth,and that public livelihood expenses were the result of economic growth. Further test results,using the GMM and panel threshold model,indicated that infrastructure investment,as the main form of development expenses,positively affected the TFP of the western regions to varying degrees. Public finance in the western regions should be aligned with the demand of supply-side structural reforms and be able to provide advanced societal investment. Furthermore,the various types of infrastructure investment in the western regions should have high levels of relevance,and in the meanwhile,closer attention should be paid to the fiscal expenditure for public livelihood.
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