Research on the impact of government financial expenditure for peoples livelihood on consumption gap between urban and rural residents in China: An cointegration analysis using panel data (1995-2009) of 31 provinces

摘要

Based on of analysis of the impact mechanism of government financial expenditure for people’s livelihood on household consumption, the paper measures the Theil Index of urban-rural consumption gap, and establishes Panel Cointegration Model to analysis the effect of government financial expenditure for people’s livelihood on urban-rural consumption gap using the panel data (1995 to 2009) of 31 provinces. The results showed that there exists a long-term stable co-integration relationship between government financial expenditure for people’s livelihood and urban-rural residents’ consumption gap in the social transitional period of china; most provinces can narrow urban-rural residents’ consumption gap through increasing financial expenditure on education, social security and agriculture; a few provinces can narrow urban-rural residents’ consumption gap through increasing financial expenditure on health. The heterogeneity that exists in the impact shows that there are significant regional differences. Estimated PVECM indicates the same results from a short-term perspective. Finally, the paper puts forward policy recommendations that how to balance government financial expenditure for people’s livelihood to narrow urban-rural consumption disparity from the long-term and short-term perspective.