Public Expenditures on Social Programs and Household Consumption in China

28 Pages Posted: 29 Mar 2010

See all articles by Emanuele Baldacci

Emanuele Baldacci

International Monetary Fund (IMF) - Fiscal Affairs Department

Giovanni Callegari

International Monetary Fund

David P. Coady

International Monetary Fund (IMF)

Ding Ding

International Monetary Fund

Manmohan Kumar

International Monetary Fund (IMF) - Research Department

Pietro Tommasino

Bank of Italy

Jaejoon Woo

International Monetary Fund (IMF) - Fiscal Affairs Department

Date Written: March 2010

Abstract

This paper shows that increasing government social expenditures can make a substantive contribution to increasing household consumption in China. The paper first undertakes an empirical study of the relationship between the savings rate and social expenditures for a panel of OECD countries and provides illustrative estimates of their implications for China. It then applies a generational accounting framework to Chinese household income survey data. This analysis suggests that a sustained 1 percent of GDP increase in public expenditures, distributed equally across education, health, and pensions, would result in a permanent increase the household consumption ratio of 1ΒΌ percentage points of GDP.

Keywords: China, People's Republic of, Cross country analysis, Economic models, Education, Fiscal reforms, Government expenditures, Health care, Income distribution, Pensions, Private consumption, Private savings, Social safety nets

Suggested Citation

Baldacci, Emanuele and Callegari, Giovanni and Coady, David P. and Ding, Ding and Kumar, Manmohan and Tommasino, Pietro and Woo, Jaejoon, Public Expenditures on Social Programs and Household Consumption in China (March 2010). IMF Working Papers, Vol. , pp. 1-28, 2010. Available at SSRN: https://ssrn.com/abstract=1578667

Emanuele Baldacci

International Monetary Fund (IMF) - Fiscal Affairs Department ( email )

700 19th Street, NW
Washington, DC 20431
United States

Giovanni Callegari

International Monetary Fund ( email )

700 19th Street, NW
Washington, DC 20431
United States

David P. Coady

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

Ding Ding (Contact Author)

International Monetary Fund ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Manmohan Kumar

International Monetary Fund (IMF) - Research Department ( email )

700 19th Street NW
Washington, DC 20431
United States
202-623-7771 (Phone)
202-589-7771 (Fax)

Pietro Tommasino

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Jaejoon Woo

International Monetary Fund (IMF) - Fiscal Affairs Department ( email )

700 19th Street, NW
Washington, DC 20431
United States

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