The Effect of Government Expenditure on Private Consumption: Evidence from China
- *Corresponding Author:
- Weihong Huang
School of Humanities and Social Sciences
Nanyang Technological University, Singapore
E-mail: [email protected]
Received September 27, 2014;Accepted September 29, 2014; Published October 07, 2014
Citation: Chen Y, Luan F, Huang W (2014) The Effect of Government Expenditure on Private Consumption: Evidence from China. J Glob Econ 2:120.doi: 10.4172/2375-4389.1000120
Copyright: 2014 Chen Y, et al. This is an open-access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.
This paper employs the panel unit root tests and dynamic OLS (DOLS) estimator based on 29 provinces of China between 1996 and 2013 to estimate the relationship between government spending and private consumption with/without disposable income. It is shown that i) an increase in the aggregate level of government spending has a positive effect on private consumption; ii) a rise in the spending on economic construction and administrative management has a negative impact on private consumption while the spending on culture and education crowds in private consumption.