Optimal Speed Of Urbanization Based On Minimization Of Economic Fluctuation

From factor perspective,urbanization is a process which production factor such as population and land transferfrom countryside to cities.Since the reform and opening up,both China's population urbanization and landurbanization grow rapidly,which have played a significant role not only in promoting development of the national economysteadily and rapidly but also in improving people's welfare.However,at present,China's urbanization still faces many problems,which include the low overalllevel of urbanization,the inadequate function of urbanization for stabilizing macro-economic growthand the need to strengthen the coordination between population urbanization and land urbanization.Since the 18th CPC National Congress,the economy of china has entered a new normal and the macroeconomy has entered a period of shifting gears.The CPC Central Committee has also proposed taking new strategiesto develop urbanization,that the core essence is to promote urbanization steadily andupgrade both the speed and the quality of urbanization.Moreover,we should also release the huge potential of new urbanization and provide a lasting strong impetus to a sustained and healthy economic development.So,research the effects of urbanization to economic fluctuations,How should the government controlling of the level and speed of urbanization in order to promote economic and social development steadily and rapidly,and what is the optimization forchina's economyhas great theory and practical significance for improving theurbanizationlevel and speed.Meanwhile,it is also important to formulate a rational urbanization development plan.This dissertation starts with the needs for urbanization to suppress economic fluctions,try to solve the optimal population and land urbanization level and speed,this the new urbanization can suppress economic fluctions at most,and maximize social welfare.At present,other research are more about internationl comparision of urbanization,as well as the mach bettween industrialization and urbanization which is partial equilibrium.From my opinion we should study urbanization speed from a general equilibrium perspective,and the optimal population and land urbanization level and speed should goals maximize social welfare.Using the research of domestic and foreign literatesfor reference and based on theories of urbanization,macroeconomic and optimal control,this PhD thesescombing the process of macroeconomic fluctuations and urbanization in our country systematically,we alsoanalyze the influence of urbanization on macroeconomic fluctuations from the aspects of supply and demand and develop a backward-looking macro-economic model whichincludes urbanization variable.At the same time,by analyzing the relevant literature on the criteria of rational urbanization and speed,we established the social welfare function about urbanization-controlling,then we model the optimal urbanization level and speed and solve the model about optimal urbanization control rules by optimal control theory.After that,we use the data of total output and inflation in China from 1988 to 2015,aswell as the populationurbanization rate and the land area ofbuilt-up area to test the model.While ensuring that the empirical results fit theoretical analysis well and the control system is stable and controllable,we calculatedthe optimal urbanization control rules,and then simulate the optimal population and land urbanization level and speed,as well as total output and inflation.Finally,we solve the social welfare function loss value.Specifically,focusing on how touse urbanization process to control macroeconomic fluctuations,this dissertation contains three parts.The first part contains the purpose and significance of the research,research status,research ideas and so on.The second part is the main content of this dissertation containing five chapters,the second chapter summarizes and analyzes the theory related to this analysis.The third chapter sort out the process of macroeconomic fluctuations and urbanization in china,as well as the influence to each other.The fourth chapter builds theoretical model of urbanization controlling macroeconomicfluctuation.Above all,we establish a total demand and supply model which includes urbanization variables and develop the social welfare function about urbanization-controlling and then solve the optimal urbanization control rules.The fifth chapter is the empirical analysis of the fourth chapter,we test whether the empirical analysis of the resultsare consistent with the theoretical model,besides,we analyze characteristics of optimal urbanization control rule and explain the corresponding reasons.Chapter six is the simulation part.we simulate the optimal population and land urbanization level and speed,as well as the fluctuation of output and inflation.we alsocompare the simulation results with actual value to judge if the current population urbanization level and speed is reasonable.The third part is the conclusion which contains research conclusion and the related policy suggestions as well as future research prospect.We choose the national data anduse EVIEWS and MATLAB to analysisthe impact of urbanization on macroeconomic fluctuations.The conclusions are as follows:Firstly,there is a positive interaction between macro-economy and urbanization,and it is feasible to control the macroeconomy by adjusting the pace and speed of urbanization.Urbanization will not only affect potential output,but also directly affect aggregate demand.Economic development will improve industrial restructuring and promote urbanization.Although there are some problems such as time mismatch between macroeconomic regulation and urbanization control,strong externalization and the heterogeneity of urbanization and the non-linear relationship between urbanization and macroeconomic development,considering there are advantages in macroeconomic regulation by controlling urbanization,if we could improvestatistical methods,optimize control technologies and expansepolicy reservation space,regulate macroeconomic fluctuation by controlling urbanization is reasonable and feasible.Secondly the optimal urbanization level and speed setting should focus on its impact on economic fluctuations.At present,there are many limitations on urbanization level and speed controlling standards,but government should take social welfare as the starting point.Social welfare function should contain both macroeconomic and urbanization volatility variables while with economic fluctuations having a greater weight in social welfare functions.Thirdly urbanization has a significant impact on macroeconomy.Urbanization should have a regular reaction to current macroeconomic fluctuations.The optimal population and land urbanization should be adjusted in a balanced path according to current output and inflation fluctuations in order to reduce economic fluctuations effectively.The optimal population and land urbanization rules are bothhave negative feedback on the total output gap but positive feedback on inflation,besides,population urbanization have a comparative advantage in managing output fluctuations yet land urbanization in inflation fluctuations.Fourthly,the optimal urbanization rules reverse economic direction and more volatile.At present,land urbanization level and speed are slow.The actual population urbanization speed is inconsistent with the optimal value in history,but the population urbanization and land urbanization speed control is relatively good in recently years in china.Compared with the optimal urbanization level and speed ratio,our country's population urbanization level is suitable and the land urbanization level is low;the actual population urbanization rate is slightly faster and the land urbanization speed is obviously slower.Lastly,the optimal urbanization control rules can effectively reduce macroeconomic fluctuations and social welfare losses.Generally speaking,the output fluctuation decrease by 63.4%and the fluctuation of inflation decrease by 84.1%.Meanwhile,thefluctuation of population urbanization rise by 20.5%and the fluctuation of land urbanization rise by 159.7%sharply.Social welfare loss dropped by 65.1%.We provide policy suggestions as follows:Firstly,the framework of macroeconomic management should include the urbanizationspeed,thegovernment should promote urbanization according with the macroeconomic conditions actively and steadily.Policymakers should monitor the volatility of variables closely,such as macroeconomic output and inflation,prevent the resonance effect between urbanization fluctuations and macroeconomic fluctuationsand ensure the macroeconomic stability through counter-cyclical urbanization regulation.Secondly,we should enhance the quality of urbanization and promote lifestyles of newurban residents and pay attention to the core status of migrant workers in urbanization to take effective measures to ensure that migrant workers can become the city's new main body.Thirdly,we should control the pace to promoteoptimal population and land urbanization well.During the "13th Five-Year Plan" period,we should especially vigilant against population urbanization grow too fast and controlpopulation urbanization speed appropriately.However,we should speed up land urbanization and promote the level and quality of landurbanization and pay attention to the investment stimulating effect of land urbanization,especially for areas in the western of china which have a low urbanization rates.Fourthly,the government should formulate corresponding fiscal and monetary policy to promote the macroeconomic fluctuation-regulation function of urbanization control,moreover,the focus of fiscal policy and monetary policy should be pegged to the factors that urbanization can not be suppressed.Lastly,we should take the new urbanization as the power of promoting supply-side structural reforms and expanding effective demand for urbanization,we should promote supply-side structural reforms with new urbanization to improve economic structure and increase potential economic output.We not only analyzes the interaction between urbanization and macroeconomic fluctuations systematically,but also models the optimal urbanization based on macro-economic fluctuations minimization.The innovations are as follows:Firstly,expand the research perspective of urbanization and speed,we solved the optimal urbanization and speed rules in condition with minimization of economic fluctuations,we also compared the actual urbanization level and speed with those of simulation in order to determine whether urbanization is reasonable.Secondly,we solved the optimal urbanization control rules.Based on the optimal control theory and the economic operation constraint rules,we develop a backward-looking macro-economic model which includes urbanization variable,and solve population and land urbanization control rules by maximizing social welfare which similar to the solution of optimal monetary policy.Thirdly,reconstruct the coordination standards of population and land urbanization.As population and land urbanization have comparative advantages in managing output and inflation fluctuations,it is necessary to give full play to their advantages respectively to ensure maximum social welfare.From the perspective of reducing economic fluctuations,This dissertation suggests to coordinate population and land urbanization speed to maximize social welfare for the first time.