The effects of public expenditure on poverty in rural China — A simulated general equilibrium approach

Abstract

This paper analyzes the effects of public expenditure on poverty in different regions of rural China. A simulated general equilibrium model is used to examine the effects of government actions on the rural poor populations' welfare. The data used in this paper are available from the China's National Bureau of Statistics. The results of this study indicate that the economic growth in China is pro-poor no matter whatever simulation scenario is adopted. The public expenditures from the governments made significant contribution to the reduction of poverty severity in rural China. In other words, the poor in rural China benefited from fruits of the economic growth induced by the public expenditures. However not all the regions have profited uniformly from the economic growth.