| Since the reissue of Chinese national debt in 1981, it has been rapidly expanding, especially after the financial reforms in 1994, the issuance jump to 100000 millon. Since then, issuance and balance of national debt have a rapid growth. Ministry of Finance issued national debt about 2.35 trillion yuan in 2007, Chinese domestic balance of national debts amounted to more than 5000 billion yuan at first time. In September 2008 as the effect of U.S. financial crisis has been continuously deepened, the issuance of national debts in 2009 is expected to at least more than 1.3 trillion.With the substantial increase in national debt, its burden and dependence have a rapid increase,and this lead to the researchers and decision-makers'worry.They are worry about the negative impact of four major issues:the financial risk and the debt crisis may be induced; heavier burden on future generations; crowding out of private investment or reduce the national savings rate and damage the ability of long-term economic growth.The focus of debate in recent years are:National debt will affect the inter-generational distributionand increase the burden on future generations? National debt will be squeezed out of private investment and private consumption? national debt will reduce the capacity of China's economic growth? The answers to these questions can not be separated from the economic effects of national debts. In order to recognize the use current situation of Chinese national debt and find problems, so as to formulate a scientific and rational policy, we need to know the economic effect of Chinese national debt.This article is divided into four parts:The first part, as introduction, states the background and the significance of topics, research methods, the framework, also points out the main innovationes and needs to be further studied.The second part consists of the first and second chapter, it mainly states the literature reviews at home and abroad, history and current situation about the issuance and use of the national debt to lay the foundation from the macro level.The third part,as the core of the paper, is divided into the third,the forth,the fifth,the sixth chapter and mainly makes an theoretical and empirical analysis of the economic effect of national debt. Chapter 3 first analyzes the mechanism of national debt to private consumption, secondly, it makes an analysis of the mechanism of national debt to private investment;finally, it has the empirical analysis of the effect of national debt to private consumption and investment.Chapter 4 analyses the effect of national debt to the resource allocation. First it introduces that national debt can optimize resource allocation, and then studies the number and structure effect of national debt. The number effect is sudied from the national resources and government resources aspects. It studies the structural effect from investment tilt and regional allocation perspectives.Chapter 5 makes an analysis of the effect of Chinese national debt to income distribution.This chapter first discusses the mechanism of national debt to income distribution from contemporary and inter-generational income distribution perspectives. Secondly, empirically analyses the effect of national debt to resident income distribution. Finally, analyses the effect of national debt to inter-generational income distribution and that is inter-generational burden of national debt. Chapter 6 analyzes effect of the national debt to economic growth.This chapter first introduces the mechanism of national debt to economic growth,then by econometric analysis methods empirically analyzes the effect of national debt capital and net circulation to economic growth as well as multiplier effect.The fouth part consists of the the seventh and the eighth chapter. Referencing the third part of the empirical results, this part discusses the factors curbing the effect of national debt and methods to enhance the effect of national debt.Chapter 7 analyzes the fouth factors cubing the economic effect of national debt:small-scale national debt circulation; unscientific national debt design structure; unreasonable using direction of treasury funds;imperfect national debt management, use efficiency of bond funds is not high.Charper 8 first summarizes the previous chapters,then proposes some solutions:to determine the optimal circulation of national debt;to adjust the term and interest rates structure of national debt;to adjust the using direction of treasury funds;to perfect the national debt management and improve use efficiency of bond funds.In this paper, drawing on previous studies, the main innovative points are as follows:1. Research perspective Now study on national debt is lack of resource allocation and income distribution, this paper studies the effect of national debt to resource allocation and income distribution, which broadens the study scope of national debt and makes up for the inadequacies of the study.2. Research methodsIn this paper, I research the consumption and investment effect, income distribution effect and economic growth effect of national debt by time series analysis methods including distributed-lag model, VAR model, coingtegration, error-correction model and Granger Causality test.During studying resource allocation effect of national debt, use the clination to funds to estimate the effect of policy change to resource allocation of various departments.By Jeffrey Wurgler's capital allocation efficiency, I study the regional resource allocation efficiency of government bonds, and use panel data model to estimate it. Other scholars rarely use those methods during studying national debt.3. The viewpointsFirst, we can conclude that the efficiency of national debt on restructuring of consumption and investment is low.Through the empirically analyzing the its stock and flow effects to private consumption by cointegration and error correction model,we conclude that Chinese "Keynesian" view on the national debt is realistic, and it promotes growth of the current period consumption. It is different from xie ziyuan's.I analyzes the the impact of national debt to private investment, the conclusion is that:China's national debt is neutral to private investment,the Ricardian Equivalence Theorem is realistic. This is different from Xie ziyuan's and consistent with Gao tiemei(2002)'s and Xu chuanzhan and Li zhongyi(2006)'s.Chapter 4, from the number and structure perspectives, analyses the effect of national debt to the allocation of resources. Through the number of resources allocation analysis, we conclude that:the issuance of treasury bonds do not affect the total amount of national resources those years, but increase the number of the government resources those years and after years.National debt on restructuring of the resources allocation mainly is studied empirically from three aspects.From the proportion of each orientation, Chinese bond funds in 1998-2004 are mainly for transportation, communications, water conservancy and urban infrastructure construction. From the clination to funds using, treasury bonds gradually is clined to ecology, returning farmland to forest and migration to build towns.From the regional allocation of funds, allocative efficiency coefficient is lower than public investment, and allocation efficiency of bond funds is not high.This shows that government does not pursuit the maximum bond funds efficiency.I make an analysis of the effect of Chinese national debt to income distribution. Through the OLS, the conclusion is that the national debt does not affect the distribution of contemporary income. Through cointegration analysis and Granger causality test it shows that the net issuance of treasury bonds are more affected by the constructive expenditure than by recurrent one, and the constructive expenditure is the Granger causity of the net issuance of treasury bonds. Chinese national debt does not have inter-generational burden in the using direction.I study the effect of the national debt to economic growth from three aspects. The conclusion through analysis of the its capital stock contribution to economic growth by OLS is that:Empirical results show that Chinese national debt has driven economic growth, but its contribution to economic growth is not very huge. By impulse response function and variance decomposition the conclusion is that LNGDP to the response of LNDB is positive throughout the analysis period, this shows that the net issuance of treasury bonds can stimulate economic growth, expansionary fiscal policy in the short term can stimulate economic growth, but intensity is not too high. Granger causality test results show that the net issuance of treasury bonds on output has a long-term and lag process.It calculates the national debt multiplier. The multiplier effect of government bonds is not fully apparent.
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