The effect of government investment — Based on an IO model

Chinese government has raised an amount of investment to prevent the national economy from the financial crisis impact and to make economy increase stably and rapidly. How to maximize the utility of government investment plays an important role in the development of China. In view of the fact that government investment transmitting through the industrial chain can generate pull effect, and the fact of overcapacity in some industrial sectors, this paper applies the theory of input-output model and establishes a model to measure the impact of the investment´s orientation and intensity on China´s economy development. Finally, the conclusions and suggestions have been presented based on the analyses.