Endogenous Economic Growth and Adjustment of Construct of Government Expenditure

Endogenous economic growth is a hot issue among economists. At the end of the 20 th century, Barro. R J., a famous American economist, first proposed the idea of considering government expenditure as an endogenous variable,and studied the relation between government Expenditure and long term economic growth. Later, many scholars expanded on Barros conclusions and dwelt on the construct of government expenditure in relation to economic growth rate. However, no agreement has been reached so far. This article attempts to analyze correlation between government expenditure and the steady growth of economy in China in terms of the quantity and the distribution of the expenses. The author concludes that given the current situation in China, it is recommended that the proportion of government expenditure in GDP be expanded and, at the same time, the construct of the government expenditure be adjusted. The author believes that this will benefit the long term steady economic growth in China.