Government Expenditure and Economic Growth: A Case Study of Cities in Anhui Province

Abstract

In the context of high-quality development, government expenditure, as a core tool of fiscal policy, significantly influences regional economic growth. Using panel data from 16 prefecture-level cities in Anhui Province from 2005 to 2023, this study constructs a fixed effects model to empirically examine the impact and mechanisms of government expenditure on economic growth. The findings are as follows: (1) Government expenditure significantly boosts economic growth, a conclusion that remains valid after robustness tests, including sample space reduction, tail trimming, and replacement of explanatory variables. (2) Government expenditure indirectly promotes economic growth by advancing industrial structure modernization and strengthening human capital. (3) Compared to northern Anhui, government expenditure has a more pronounced effect on the economic growth of southern cities. The research results provide a theoretical basis for optimizing the structure of government expenditure and enhancing the effectiveness of fiscal policies, offering policy insights for promoting high-quality regional economic development.