Public Expenditures on Social Programs and Household Consumption in China

By Emanuele Baldacci, Ding Ding, David Coady, Giovanni Callegari, Pietro Tommasino, Jaejoon Woo, Manmohan S. Kumar

March 1, 2010

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Emanuele Baldacci, Ding Ding, David Coady, Giovanni Callegari, Pietro Tommasino, Jaejoon Woo, and Manmohan S. Kumar Public Expenditures on Social Programs and Household Consumption in China, (USA: International Monetary Fund, 2010) accessed December 22, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

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 1¼ percentage points of GDP.

Subject: Consumption, Expenditure, Health care spending, Household consumption, Income

Keywords: Consumption impact, Expenditure reform, GDP increase, Household saving, Savings rate, WP

Publication Details

Pages:

28
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2010/069
Stock No:

WPIEA2010069
ISBN:

9781451982138
ISSN:

1018-5941

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