An Empirical Study on Elastic Effect of Fiscal Expenditure to Household Consumption in China

By using a series of modern econometric methods, we studied the relationship between fiscal expenditure and household consumption in China. Our results are summarized as follows: (a) there exists a long term equilibrium relationship between them; (b) fiscal expenditure has positive effect to household consumption but there exists a decreasing marginal effect; (c) error spatial auto-regression model is a good choice to study the relation between them, and the household consumption level of local province is not only affected by that of adjacent provinces but also by the fiscal expenditure of local and adjacent provinces.