Abstract: Abstract:With the co-integration analysis on time series data, it can be found that there were a long-term dynamic equilibrium telation and a short-term error correction mechanism among economic development, system transferring and administration cost in 1978 ~ 2003 in China. The economic development had a promoting influence to the administration cost, and the system transfering had a negative effect to the administration cost. With the method of pulse response function and the variance decomposition based on VAR model, it can be discovered that the administration cost had a bigger response to the change rate of economic development than to that of system transferring