Empirical Analysis on Effect of Agricultural Financial Investment on Increase of Farmers’ Income

On the basis of economic data from 1978 to 2006, the co-integration theory is applied to discuss the relation between agricultural financial investment and farmers’ income. The statistic AR model is obtained. Then, it makes pulse response analysis in combination with principle of pulse response analysis. The regression results show that support in agricultural production, various agricultural operating expenses and three types of costs for agricultural science and technology are favorable to farmers’ income, while expenditure in agricultural capital construction and rural relief costs hinder increase of farmers’ income. The results of pulse response analysis indicate that the change in support of agricultural production and various agricultural operating expenses have positive impact on farmers’ net income, and the impact is greater and greater from the second year; the response of expenditure in agricultural capital construction and rural relief cost is positive in the beginning and starts to fluctuate from the third year; the pulse response of three types of costs for agricultural science and technology is negative, lasts about five periods, and then turns to positive impact. Finally, combining characteristics of China’s financial support for agriculture, it concludes that the scale, proportion and structure of financial support for agriculture are quite improper.