Abstract: Based on the redefinition of the effect of fiscal expenditure on private investment, this paper uses quarterly data to analyze the long-term and short-term effects of fiscal expenditure on private investment in China by using dynamic econometric methods such as vector autoregression (VAR) model, cointegration test and error correction model, and the results show that fiscal expenditure has a certain crowding out effect on private investment in the short term, while the long-term equilibrium relationship is manifested as a crowding effect.

Keyword: Fiscal expenditure; Private investment; Extrusion effect; Crowding effect