Macroeconomic Regulation And Control Policy Research, A Recovery Phase

The world economy recovery shows continued uncertainty and unbalancein this post-crisis era. Despite its earlier recovery than most other economicbodies, China also faces a dilemma of stagflation and lack of sustainabledevelopment potential. This challenge has never been met since after China’seconomic reform and hence requires the policy makers of more delicacy inhelming China’s macro economic policies. The intrinsic economic motivationdominates the making of macro control policy. According to classicalKeynesian doctrine, crisis can be solved by stimulation of demand throughexercise of fiscal or monetary polices. However, the quantitative easing of FEDalso faces various problems in the current U.S. economy depression mire.<The Economists> publishes an article holding that the U.S. economyshall also suffer a “lost10years” as the Japan economy did in last century. Thefluctuation of economic cycle and performance of all anti-cycle policy toolsmakes fiscal policy revalued as a basic anti-cycle instrument: Firstly, theimplementation of monetary policy has been over-fully operated during the“Big Moderation” period. After financial crisis in2008, FED lowers the interestrate to nearly zero in a short time, while by the Taylor rule that FED follows,the interest rate of that time shall be further lowered by3-5%to resist the crisis.That obviously exceeds the ability of any monetary policy tools. Secondly, in along period after the crisis, monetary policy tools face “Goodhart’s law” effect----a developed financial market’s quick reaction due to its anticipationof interest cut and quantitative easing by central bank makes any monetarypolicy tool invalid once it is adopted. A reasonable use of fiscal policy withoutproducing much aftereffect and its cooperation with monetary policy toneutralize the negative effect of other anti-periodical tools become the keypoint of macro control in economic recovery time.This article bases on economic recovery theories, further analyzeseconomic recovery period from macro economic indicators, autonomouseconomic operation indicators, enterprises operation environmental restrictionindicators and potential economic growth aspect. Through comparison andanalysis of different economics theories, this article tries to probe into thefundamental momentum of economic recovery.This article holds that a governmental macro control is crucialconsidering that market could not conquer its own defects and realizes recoverythrough its own power under this long curve crisis, or else a massive economicand social loss could be caused. On the other hand, the macro policy principalsin economic recovery period are more complicated comparing with boomingand depression time. Those principals have to be made through analysis ofrecovery features and relationship between short and long term periods.As both fiscal and monetary policy play a key role in macro economic control,this article draws a conclusion that an effective macro economic control withinrecovery time has to be based on collection of both through analysis on the operation mechanism and characteristic of each policy, and the fisical policyshould hold the major position. The recovery of world economy in presentfaces many difficulties, China’s recovery also experiences a slow down after itsinitial quick rebound. It also faces threat of uprising production cost,superabundance of producing capability and inflation. The U.S. economy alsoexperienced similar dilemma before its “New Economy” appears. This “NewEconomy” efficiently solves inflation and time stagnation problem duringeconomy recovery and therefore can be a successful lesson for China’s macrocontrol in current economy recovery. Finally, this article suggests the macrocontrol policy shall be adopted in the current recovery through analysis on keythrust of China’s economy.