An Analysis On The Effects Of China's Fiscal And Monetary Policies Since 1998

In 1997, China faced a difficult position of deflation, descending of economic growth and shortage of domestic and external demand. The government of China has taken decisive measures - expansionary fiscal policy and prudent monetary policy, and these policies has continued 6 years. How to appraise the effects of these policies in detail and make a further rise in their positive effects is the focus of attention from learners and theorists. The paper gives an analysis to the effects of the fiscal and monetary policies since 1998. First, the paper introduces the background and contents of these policies. Second, it gives the theoretical models to choose fiscal and monetary policies and to appraise their effects. Third, it calculates their effects upon the economic growth using contlibution rate method and regression analysis, and the calculations include the contributions of public debt investments and adjustment of taxation, the extrusion domino effect and the effects of prudent monetary policy. In the end, the paper makes a complete appraisal to composite effects of these policies and draws a conclusion after computing the multipliers of fiscal and monetary policies, the extent of the extrusion domino effect, the effects upon employment and the regulation of economic structure, etc.The innovation of the paper lies in complete analysis on the contributions of fiscal policy, the extent of the domino effect of extrusion and the multipliers of the policies. We can see that fiscal policy has made an important role to the economic growth, and its contribution is about 17.43%-25.25%. But the effect has shown a descending frend in the past six years, and the domino effect of extrusion did exist, its extrusion rate being 3.85%-10.89%. Compared with the fiscal policy, the prudent monetary policy has a weak effect upon the economic growth, the multipliers of the prudent monetary policy are much smaller than that of the expansionary fiscal policy, and the effect has also shown a descending tend since 1998. But in the eyes of its composite effects, the prudent monetary policy is effective.