The Empirical Study On The Effectiveness Of Fiscal Policy In China

Now the effectiveness of fiscal policy(EFP)in China is not only one of the mostimportant but pendent theoretic problems, but it is also one of significant practicalproblems concerned with choice and adjustment of policy, that is, the practices call forus to study the EFP.The author insists that EFP lies on the next three facts: Firstly, can fiscal policyinfluence real economic output? Secondly, what's the transmission mechanism thatfiscal policy influences on the output? Thirdly, how are the effects of the fiscal policyin China? In detail, the main contents are as follows:1. Introduction. Introduce the background and purposes of the research work;Comments on the related literature about the subject;Outlines the means of study andcontent and innovations of the thesis.2. Analysis on the theory of the EFP. Outlines the general concept of relatedfiscal policy;Discusses the different views on fiscal policy in the AD-AS framework;Analyses the structure effects of fiscal policy on economic growth based on theproduction function;Analyses the transmission mechanism of fiscal policy and thefactors that affect the effectiveness of fiscal policy in the IS-LM framework. 3. The macro economy function and fiscal policy. Analyses the country'sfunction of the macro economy and it's periodic fluctuation feature in China in thepast twenty years;Clarifies the application of the fiscal policy in different economiccycles.4. Empirical analysis on the relationship between the fiscal policy andproduction in China. Briefly estimates the relationship between the fiscal policy andproduction in China in the past twenty years;Empirically analyses the effects of bothtotal amount and structure of fiscal policy on production. Empirically analyses the influenceof the three factors such as household consumption and investment and net export onthe EFP.5. Empirical analysis on transmission mechanism of fiscal policy in China.Empirically analyses the influence of fiscal policy on the three macroeconomicmedi-factors, income distribution and interest rate and price;Empirically analyses theinfluence of the three medi-factors on the consumption and investment by establishingthe rural and urban household consumption function and state-owned units andprivate investment function. Point out the future for the adjustment of fiscal policy.6. Empirical analysis on fiscal policy's effects in the IS-LM framework.Statically analyses Chinese IS-LM model, estimates the slope of Chinese IS curve andLM curve. Estimates the multiplier of fiscal policy,and promotion of fiscal policy toeconomic growth in the empirical IS-LM model. By the time varying parametermodel, dynamically estimates the marginal propensity to consume and the elasticity ofinvestment to the interest rate, dynamically analyses the Chinese IS-LM model,dynamically estimates the multiplier of the multiplier of government expenditure andthe fiscal policy.There are new ideas and innovations in the aspects of the subject and system ofstudy in the dissertation, including:1)It is the first time in the nation to take theeffectiveness of the fiscal policy as the research subject, which complement the field.2) This is the first time to construct a research framework basised on the IS-LMModel, including analysis on the relationship between the fiscal policy and totalproduction, the transmission mechanism of fiscal policy, and the effects of fiscalpolicy. 3) This is the first time to express the main research clue basised on the 3parameters of income distribution, interest rate, and price to empirically analyze thetransmission mechanism. 4) This is the first time to take the consumer behavioranalysis and investment behavior analysis as the basis of making policy decision. Inadditon, it combines the fiscal policy and above behaviors. So, it is easy for us toinvestigate the deeper reason for the effects of the fiscal policy.There are new ideas and innovations in the aspects of the resreach approaches,including: using the polydistribution lag model, vector error correct model, time varyparameter model to dynamicly analyse the output effects of the fiscal policy, thetransmission mechanism of fiscal policy, and multiply effect of fiscal policy. Thenewest econometric approaches were used, such as variance decomposition, impulseresponse function, cointegration test, and the Granger test to develop the topic on EFPto a new region and draw valuable conclusions.