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1998-2007, National Debt Policy Empirical Analysis of Stimulating Domestic Demand

Author: WangLu
Tutor: HeJiaMing
School: Southwestern University of Finance and Economics
Course: Finance
Keywords: Government debt is Stimulating domestic demand National debt IS-LM model
CLC: F224
Type: Master's thesis
Year: 2010
Downloads: 204
Quote: 0
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Abstract

Government bonds in the national credit basis, in accordance with the general principles of the debt, the creditor-debtor relationship to the community to raise funds. Professor Wu Jun, president of the Foreign Economic and Trade University of Finance once said: \directly reflects the depth of government involvement in the distribution of national income; the other hand, the national debt is a financial areas closely related with the financial markets, currency markets. \bridge. Treasuries on the macro-economic and micro-economic effects, the impact on economic growth and economic stability, the Chinese and foreign scholars have different opinions. Professor Wang Chuan Lun, Renmin University of China Financial Financial Institute of the view that: \Gradually improved as the economy in the form of a proactive fiscal policy gradually fade out, and began to implement a prudent fiscal policy. In the face of the economic crisis broke out in 2008, many scholars have begun with the 1998 comparative analysis of the results show that there are a lot of similarities in the economic crisis of 2008 and the economic crisis in 1998 and 2008, the economic crisis seems to be more serious. According to the China Daily news: \become the lowest growth rate after the 1998 economic crisis, the national debt policy as an important tool of the government in regulating the economy, since 1998, has played an important role. Therefore, through analysis of the economic effects of the the 1998-2007 national debt policy analysis, especially the effect of effective domestic demand and made some suggestions, want to be able to play a constructive role in the current economic crisis facing. This article is from theory to practice, and to make appropriate recommendations for the practice, and is divided into four parts. The first part is written to the national debt in Western theory. Economic circles in the West, government bonds and treasury bonds are two different concepts, because the Western countries there are local government debt and, therefore, the national debt refers only to the central government debt. This is different from the definition of the concept with the Chinese government bonds, local governments in China are not allowed to issue debt, government bonds are generally equivalent to the bonds. Western economics, the theory about the national debt is basically divided into three main areas, respectively useful theory for the treasury bonds, treasury bonds harmful theory and Treasuries neutral theory. For Western government bonds theoretical, this article is chronological excerpts from the more important theory of government bonds. China's bond market development is shorter, so the relatively short time of development of the theory of Chinese government bonds, relatively plain. Many Chinese scholars on Chinese government bonds theory is based on a theoretical model of Western government bonds combined with the Chinese practice of data to analyze, model of investment in bonds is only suitable for China's specific national conditions and did not form. The second part is written about the status of China's national debt scale. Since 1998, our national debt scale linear upward trend, then become hot spots over the years a number of scholars have argued whether it is reasonable for the size of the National Debt. There are many standard measure of government debt is to measure the five criteria from the national debt burden rate government bonds dependence on bond debt service ratio, residents should debt rate and government debt deficit rate between 1998-2007 Scale of National Debt, different standards would come to a different conclusion. Comprehensive look at the size of the National Debt is indeed large, although there is some room for expansion, but also should pay attention to the huge debt pressure caused the national debt to debt service and financial risks, and other related issues. In addition, due to the short time established by the government bond market in China, the national debt theory is not in-depth, used to measure the standard of the Scale of National Debt is selected from the group consisting of internationally recognized standards for the applicability of the government bond market in China is to be studied. The third part is the empirical part, mainly constituted by the establishment of the two models. First, is the derivation of the national debt, as well as the calculation of our national debt; Second, use the IS-LM model to analyze the role in boosting China's treasury bond investment demand analysis. China's government bond investment multiplier analysis, the main use of the four-sector economic theories of Keynes's national debt and treasury bond investment multiplier formula is derived, calculated by linear regression of the data for the 1998-2007 National Debt investment multiplier. The data of this paper is to select the data for the decade 1998-2007, which is the different advantages and other related articles where this paper calculated the decade of bond investment multiplier of 1.82. The 1998-2003 bond investment multiplier Xia Changjie scholars calculated the average was 2.08; 1998-2002 FISCAL scholars government bonds the Investment Multiplier average 1.62; grams door tower and Smith calculated the 1954-1963 long-term government spending multiplier was 1.84. The calculated bond investment multiplier in this paper does not consider the capital market, otherwise the multiplier will be smaller. This article also through actual data analysis the 1998-2007 bond investment role in boosting the economy, and the results show that the National Debt investment multiplier is actually less than the calculated value of the theory, mainly due to the degree of government bonds in place, the direction of investment in bonds, as well as statistical data, closely related to the error, etc., and the National Debt investment multiplier is decreasing, which is very conducive to the subsequent investment in bonds to spur economic growth trends. About the National Debt on the demand analysis, this article use IS-LM model to analyze whether the crowding out of our investment in bonds, results show that our investment in bonds not only failed to produce a crowding-out effect, and to some extent, squeezed into effect. Government investment crowding out of private consumption and private investment is often explored in Western economics, is also recognized by many countries in the West and proven. Crowding in the national debt has been also been many domestic scholars confirmed that the practice has proven that China's investment in bonds of private consumption and private investment has a strong leading role. This article were also characteristics of the IS and LM curves through our special statement of the IS-LM model to explain the reasons for China's investment in bonds Crowding generated. In addition, this paper also through the analysis of the composition and changes from 1998 to 2007, China's fixed asset investment entities confirmed that China's treasury bond investment crowding out the private economy is not even produce squeezed into effect. The fourth part is written on the 1998-2007 economic pull of China's investment in bonds, especially stimulating domestic demand and the problems and I put forward recommendations. In this paper, for the problems of the national debt to stimulate domestic demand, such as China's investment in bonds to boost consumer spending effect was not significant. In addition, China's investment in bonds there are certain problems in the scale of national debt issuance costs, bond yields, bond investment risks and areas for improvement. The national debt has played a significant role in stimulating economic growth, adjusting the economic structure and promote the economic growth pattern will. Therefore, the problem of the national debt, I think that in the national debt policy in the future, we should pay attention to maintaining the appropriate scale of government bonds, further adjust the direction and focus of investment in government bonds and other fiscal policy, monetary policy combined to play a larger and more comprehensive role. With the national attention on the national debt policy, practice, confirmed the effect of bond investment, the national debt policy has gradually become a important tool of government macroeconomic regulation, government bonds also become the hotspot of the theorists. China's market-oriented reform is unprecedented, so it is difficult to find the relevant economic theory for guidance. The intervention of the Western economic theory to solve the problem of China's economic theory provides a good tool and perspective. Therefore, this article is to draw of Western economics economic model combined with China's actual analysis of government bonds in the 1998-2007 decade positive and negative impacts on the economy. The significance of this paper lies not only in the combination of theory and practice, a comprehensive analysis of the system driving demand for treasury bonds and the questions and related policy proposals on this basis. Finally, because of my academic ability and the limitations of the time of writing, the text views and some scholars differ, although the starting point of the study is different, I also that differences in the reasons, but it is inevitable to study deep enough, do not know the full result Hope you scholars criticism.

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