Abstract: Based on Barro's (1990) theory of economic growth, this article deduces a model for optimal fiscal expenditure structure and applies the model to data (1999-2011) of northwestern Liaoning (Fuxin, Tieling, Chaoyang). The results showed that the fiscal expenditure structure is not reasonable in the three local governments: Investment of social security expenditure is inadequate in Fuxin and Chaoyang; Economic construction expenditures, science and education expenditures and administrative expenditures are lower than the theoretical optimal value in Tieling; Except the expenditure in economic construction, other capital investments are lower than the theoretical optimal value. Based on this, the essay makes a number of policy recommendations to optimize local fiscal expenditure structure to promote local economic growth.