Abstract

According to various basic functions of government expenditure can be divided into public welfare spending and welfare spending two categories of non-public, at this stage, the government finances public welfare expenditures have complementary effects on consumption, rather than spending on public welfare the consumer has a substitution effect, and the former was stronger than the latter. Analysis of public welfare spending to the consumer has a complementary effect on the underlying causes, we act according to the basic theory and methods of economics, assuming that the residents to determine their psychological security is an important factor in consumer behavior, and public welfare expenditure, it is the psychological impact on the safety of important factors, and through testing found that when the public welfare spending to meet the security needs of the residents the ability of mental decline, people's consumption growth on income growth response factor significantly smaller. The policy implications of these findings is that by the internal structure of government spending to adjust, that is, on the one hand increase the supply of public welfare spending efforts to maintain the psychological safety of the residents; other appropriate non-public welfare spending to reduce the "fat" part of the to enhance the consumer wishes to achieve, the purpose of stimulating the growth of household consumption. We divide government spending into two categories that are public welfare spending and non-public welfare spending . We find that PWS is complement for private consumption while NPWS is substitute, and the former is more effective than the latter. To analysis the complement effect of PWS on private consumption, we use the theories and methods of behavioral economics and assume that consumer behavior is determined by people's psychological security which in turn is determined by PWS. Our empirical estimates suggest that if the ability of PWS to support psychological security is lower, the reaction coefficient of consumption growth to income growth will diminish significantly. The policy implication is that we can increase PWS while reduce NPWS to promote consumer's psychological security, increase the consumption willingness and stimulate the consumption growth