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Monetary and fiscal policy coordination running deflationary conditions

Author: WangDingXiang
Tutor: RanGuangHe
School: Southwest Agricultural University
Course: Agricultural Economics and Management
Keywords: Deflation Monetary policy Fiscal policy Coordinated operation
CLC: F822.0
Type: Master's thesis
Year: 2001
Downloads: 224
Quote: 4
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Abstract

This paper is about the monetary and fiscal policy coordination under deflation run Studies. The main objective of the study: First, to explore the theoretical basis of monetary policy and fiscal policy coordination running; since China's economic reform is to examine the practice of monetary policy and fiscal policy coordination running and summed up the lessons learned; to the current deflationary macroeconomic run and make an empirical analysis by constructing a model of deflation; Fourth, to examine the practical difficulties faced by the running of monetary policy and fiscal policy coordination; Fifth, previous research based on the corresponding strategic vision and policy measures. The findings and strategic initiatives are as follows: 1. Give full play to the effect of monetary policy and fiscal policy in macroeconomic regulation and coordinated operation of the policy mix, the two policies both contact and differences between the essential requirements of the core of the modern market economy, macro-control policy options. The total social supply and demand imbalance is often a basic contradiction in the market economy under the conditions of the objective requirements of the government macro-control, and monetary and fiscal policies through the movement of money and regulation, and can have an impact on aggregate supply and demand, so as to realize the total social supply and demand of the general balanced, promoting sustainable economic development, and thus the monetary and fiscal policies are often the macroeconomic policies of the government both at the same time. But the two policies are quite different in terms of regulation body, the level of regulation, and policy role scope and areas of policy delay, thus requiring two policies in a coordinated operation should be a clear division of labor, in the division of labor in combination. Monetary policy should focus on the total adjustment, increase economic efficiency and maintain economic stability; fiscal policy should focus on the regulatory structure, promote economic growth and safeguarding social fairness. IS-LM model and between economic variables linkage effects analysis showed that the two policies are complementary in nature, close collaboration between the two is not only favorable to itself the power to enhance the policy, but also can produce the ideal policy mix effects and achieve economic effective regulation. Different economic and financial background tend to have different policies with the model, applied to different economic backgrounds generally have \The combination and coordination of operation is also inseparable from the basic conditions of the market system, full-featured code of conduct of market players, efficient and safe financial system and a standardized and effective government action. 2. Moment of great importance in the understanding and practice of monetary policy and fiscal policy coordination to avoid two policies disjointed, should be drawn from the past 20 years, two main policy practice lessons learned. China's economic system (from a planned economy to a market economy) and the government's macroeconomic regulation and control (direct control to indirect regulation) and the gradual conversion of an important period in 1979-99. Monetary policy and fiscal policy co-ordination in here also has undergone nine stages, the operation showed significant transition characteristics, but the basic impression is \death \Therefore be used with caution with loose with tight \Studies have shown that the two policies in the growth of domestic ease deflation coordination there is lack of effective liaison mechanism, such as inter-departmental run two main policy coordination mechanism is not perfect and policy point role is not able to reflect the problem, rooted in the awareness and system supply lag fuzzy, unclear division of policy, debt policy. 3. Current deflation is the real economy and monetary economy shrinking, the overall supply and demand imbalance rooted in the community, and thus anti-deflation is still the fundamental task of the current and future period monetary and fiscal policy coordination running. Price Index (the national retail price index, consumer price index, producer price index, etc.) to be continued negative growth since September 1997, indicating that the advent of Deflation in China and continues, it is the social total for the thread greater than the aggregate demand in the price is a reflection of the current economic life of many factors formed, which is not excessive supply of power to the low quality of the supply structure is irrational, lack of investment, consumption, export demand distorted, the unreasonable government price intervention as well as plan and market two institutional friction of the price mechanism, in nominal and real money supply growth reduced the money supply structure management units. Money flow ju speed down, as well as the existence of economic pre-Peng, will shop chu is currently steep deflation. Social aggregate supply (AS), the total social demand (AD), government action (G), the economic system (S), money supply (MS) and price pre-Suo normalized E \fitting model for P = f (AS, AD, G, S, MS) + AE. Thus regulate social supply and demand, alleviate Invite the Huojin Shao, facing the current monetary and fiscal policies can hardly nursery. The study decline that to ease deflation, the two policies Association trouble with should solve the social supply quality and structural problems, start domestic demand, promote enterprise reform and development to prevent fiscal and financial risks, such as multi-pronged approach. In addition, the two policies should be sent to defend the development of the West Indies induction of information, capital allocation and policy control three functional role. 4. In the reality of the economic and financial context, the solid prime objective existence of a variety of system plagued the coordinated operation of the credit monetary policy and fiscal policy. These constraints are: (1) the health of the financial system is not ideal, to boycott enhanced financial body structure is irrational, the main operational risks and policies of the gold contact, low degree of development of the financial market, the operation is not standardized, low quality of credit assets of state-owned banks etc.; (2) Financial severely weakened, on the one hand, the performance of financial earning capacity is obviously insufficient, on the other hand the level of fiscal expenditure the rigid growth: (3) the lack of an effective system. Such as the modern enterprise system is not really in place, a modern financial system has not yet been completed, the currency market system is not perfect?

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