State budget expenses as a component of the social and economic policy mechanism

The object of this study is a theoretical and practical basis of the state budget expenses' function as a component of the social and economic policy. The objective of the study is to reveal the social and economic effect of budget expenses and to define specifics of the influence of expenses segregated by current and capital expenditures based on the social and economic development indices. Methods of the study. The following scientific methods were used: system, factor, correlation and regression analyses, comparison, analysis and synthesis that jointly allowed implementing the uniform research concept, determining precise quantitative connections between the studied features, carrying out the comprehensive analysis of the studied object and making scientific conclusions. Work results. As a result the authors have revealed the social and economic effect of budget expenses reflected by the regulation of consumption and stimulation of production output, social security of every citizen, development of the scientific and technical progress and international activity, etc. The correlation and regression analysis allowed us to study the influence of capital and operational expenses at the main indices of the social and economic development, in particular at: the gross domestic product (GDP) output; income, expenses and savings of the population; amounts of wages and social assistance paid (and other current transfers); and also to determine relations between the abovementioned indices. We have substantiated the importance of capital expenses from the national and local budgets, since the capital expenditures are exactly the factor influencing the modernization of production capacities, stimulating business activities of the entities and leading to growth of the employment rate, decrease of the unemployment rate, increase of the labor efficiency rate and social security level, and growth of the national production output, etc. Score of results. Finance. Budget policy. Budget system. Economic analysis. Conclusions. The budget expenses represent a powerful tool for regulation of economic processes and cash flows country-wide. By using the budget revenues and expenses as the financial tools the state authorities are able to change the structure and shares of contribution of the national industrial output, to regulate the level of social standards and financial support of the population, internal and external economic activities and to develop international financial relations. Based on the regression analysis' results we have proven that any change of the structure and amounts of capital expenditures cause a substantial growth of the major indices of economy and social development; particularly, if the amount of capital expenses increases by UAH 1 bln, in average the following indices grow: GDP by UAH 21.4 bln, people's expenditures and savings by UAH 14.1 bln, wages by UAH 5.9 bln and social assistance (and other current transfers) by UAH 4.6 bln. Nevertheless, in the period of the study (2007 – 2016) the closest correlation dependence existed between the current expenses and GDP, revenues, expenses and savings of the population, wages and social assistance (and other transfers) making 1.00; 0.98; 0.98 and 0.98 respectively.