China's Macro-economy: Growth And Volatility

The base of New classical theory is the theory of relative price which takes allocation of resources as the core. Allocation of resources will achieve optimization through relative price which denotes factors scarcity and people's preference. There are not any relations among any gross in this theory. But in the true life, the statistic variables in the system of national accounts are expressed by the monetary gross. That is to say the gross income which is expressed by the GDP and wage, profit, consumption, investment are different from relative price in the New classical theory. They do not denote any input-output relations in real goods. They come from capitalistic economic institution. As Marx's description, capitalistic economy is a special mode which is to allocate resources pro rata. This mode is a kind of competition which bases on monetary value. When mainstream economics take statistic variables of national income on the producer function, it will lead to logistic inconsistency. That is inconsistency between gross and relative price. But in the realistic experience, New classical theory can not use the statistic variables in the system of national accounts to explain allocation of resources, economic growth, effective demand and economic institution.The theoretical and realistic inconsistency in the mainstream economics result in many inextricable dispute. So in the true life, it can not explain reality and can not carry out effective forecast. Therefore in this dissertation we establish a monetary system to analyze economic growth and fluctuation in China. And we establish relationship between gross and relative price to express a general equilibrium theory, which is different from New classical theory. That is classical general equilibrium theory. The dissertation is structured as follows:The introduction part is on the theoretical and practical values, research background, research methodology, logical structure, and innovation of this research.Chapter 1 summarized monetary theory. In the beginning, we analyze what is money, the character of money. Then we analyze the three essential question in the debates of monetary theory: one divides into two, stock and flow, endogenetic and exogenous monetary supply. In the end, we acquire a method to add up to different goods.In chapter 2 we concentrate on the relative price to express the reciprocity between the gross and relative price. And the income effect is important. Throuth expatiating the character of income and income effects, we establish relationship between gross and relative price to express a general equilibrium theory, which is different from New classical theory. That is classical general equilibrium theory.In chapter 3 we construct a simple monetary model to analyze the dynamic effects of monetary and fiscal policies under the condition of Endogenous Economic Growth in China. Through our analysis, we conclude that in a declining economy, if government change the aggregate demand based on NI-AE model or IS-LM model, it will lead to inflation or stagflation. Then we conduct a analysis of financial development and economic growth in China and conclude that financial development will promote economic growth.In chapter 4 basing on the above model, we analyze the reason for unbalancing the proportion of functional income distribution and influence of it on the effective demand structure. We try to construct a new frame to explain the problem of functional income distribution maladjustment and the unbalance of effective demand structure. We conclude that for the sake of steady and rapid growth of national economy, the government should especially pay attention to the problem of effective demand, and adjust income distribution timely, and proportion the capital stock to the income flow.In chapter 5 traditional economic theory consider that there is a input-output relation based on the technique among macroscopical economic variables. We conclude that all of the statistic variables in the system of national accounts are determined by the social relations and monetary system. It have no relation to producer function. And we use the new theory to analyze the inflation in China, and conclude that the inflation in China is not the rise of price in general business cycle but the stagflation.