The size of fiscal expenditure reflect the degree that government intervene in market, if government intervene in market too much, the action of government will lower economic growth. In order to choose optimal size of fiscal expenditure, the paper developed a endogenous growth model including government, and estimated the optimal size of fiscal expenditure in china from experience, the period is from 1978 to 2000. The conclusion is the optimal internal budget size of fiscal expenditure is 21.2% (fiscal expenditure relative to GDP), the total optimal size of fiscal expenditure is 24% (the total fiscal expenditure relative to GDP).
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