Abstract: This paper firstly constructs a dynamic response mechanism model of the impact of monetary regulation and fiscal expenditure on economic growth, then, based on provincial panel data, it makes an analysis of the regional difference effect of interest rate adjustment and fiscal expenditure on economic growth. The results show that there exists obvious contradiction between inflation and economic growth under the current economic system. Economic growth itself has a space effect. The effect of rising interest rate on economic growth gradually becomes weaker from east to west. Meanwhile, the impact of fiscal policy presents a law of regional difference, which is strong in the east region, weak in the central region and strong in the west region. There exist regional complementary and convergence in the effect of fiscal policy and monetary adjustment. According to the macro-policies of differential treatment and maintaining both protection and pressure, the policy-makers should put into effect the different and inclined monetary and fiscal policies to different regions.

Key words: monetary regulation; fiscal expenditure; SVAR; inflation