Adopting a five-variable SVECM model,this paper estimates the dynamic effect of fiscal revenue and spending shocks on such macroeconomic variables as GDP,price level and so on,and test the fiscal theory of price level at the same time. The identifying methods of shocks are distinguishing permanent and transitional shocks with the assumption of fiscal decision lag. The empirical result shows that the positive fiscal revenue shocks significantly reduce the output and price level,whereas the positive effect on the output due to positive shocks of fiscal spending is weaker than that of negative shocks of fiscal revenue,the effect on price of fiscal spending shocks is not significant. Thus,it’s reasonable to believe that tax-cutting will do better in the economic growth than expanding the fiscal spending. In addition,in the period of sampling,the results don’t support the fiscal theory of price level.