The Research On Economic Effects Of Disaster Risk And Choices Of Policies

In recent years,China's economy has entered a new normal,with greater risks of economic downturn,structural adjustment and painful reforms.With the continuous deepening and opening of the domestic financial market,the influence of internal and external unfavorable factors on China's macroeconomic and financial systems continues to increase.Strengthening the ability of China's economy to withstand risks and avoid the adverse impact of disasters on China's economy will be an urgent issue for academia and policy makers.Based on the economic effects caused by disaster risk and the policy choices for dealing with disaster risk,this paper uses the dynamic stochastic general equilibrium(DSGE)model to explore the following aspects,and gives corresponding theoretical analysis and simulation results.First,this paper builds a DSGE model with the linage of tax policy,by introducing capital disaster,TFP disaster and double disaster,to analyze the impacts of disaster risk and the effects of tax reduction policy.This paper comes to the following conclusions:(1)The negative impact of double disaster is biggest among the three kinds of disaster.(2)The reduction of capital tax rate under capital disaster and double disaster has the most obvious effect on the growth of output,and the reduction of consumption tax under TFP disaster has the most obvious effect on the growth of output,lowering the capital tax rate is the most dependent on government debt issuance.(3)Compared with TFP disaster,the crowding-out effect on investment is stronger by increasing government expenditure under capital disaster and double disaster.(4)Under the capital disaster and double disaster,when the labor tax rate and the capital tax rate are negatively linked,the reduction of the labor tax rate will weaken the output growth,under the TFP disaster,the linkage mode of the tax rate has less influence on the effect of the tax reduction policy.Second,this paper introduces TFP disaster,capital disaster and double disaster into a dynamic stochastic general equilibrium model with financial accelerator to analyse the impact of disaster risk on China's economy.this paper also integrates the capital price and the growth rate of capital price into the traditional Taylor rule to evaluate the effectiveness of macroprudential monetary policy and its welfare effects.This paper comes to the following conclusions:(1)Among the three kinds of disaster probability shocks,the double disaster has the biggest negative impact on output.(2)Macro-prudent monetary policy based on the traditional Taylor rule with a capital price peg can effectively improve the social welfare loss in TFP disaster and double disaster situations.(3)Whether from the perspective of improving social welfare loss or from stabilizing macroeconomic and capital price fluctuation,macro prudential monetary policy pegged to capital prices is better than macro prudential monetary policy focusing on the growth rate capital price.Third,on the basis of GK-DSGE model,this paper introduces TFP disaster and characterizes financial shock with negative capital quality shock.It also analyses the impact of various exogenous shocks on the economic system and the effect of macroprudential monetary policy on economic system,which focuses on capital price,market financing premium and macro financial leverage.Based on the loss function of social welfare and impulse response analysis,the optimal macroprudential monetary policy is established.The study shows:(1)The impact of financial shock on the economic systems is greater than the TFP disaster probability shock.(2)Macro-prudential monetary policy can weaken the positive effect of technological shock on economic growth and weaken the effect of monetary policy on the economy.(3)The macro-prudential monetary policy pegged to capital prices is most effective in weakening the negative impact of the TFP disaster on the economic system.(4)The macro-prudential monetary policy rules under the financial shock should be the single rule of pegged to the macro-financial leverage indicator,which causes the least loss of social welfare,and has the best effect on the regulation of the economic system,but at the same time it will amplify the negative impact of financial shock on inflation.Last but not least,this paper proposes a two-country DSGE model to analyze the transnational effects of TFP disaster probability shock from America under different technology absorption levels of China and different trade openness of China and America.The study shows:(1)The negative impact of America's TFP disaster on American economy is greater than the negative impact on Chinese economy.(2)With the improvement of China's independent technological innovation capability,the negative effects of America's TFP disaster on China's economy will be weakened,but excessive technology absorption or independent technological innovation is not conducive to improve the welfare level of China.(3)The protective trade policy of China and America is not effective in response to the negative impact of America's TFP disaster,and will reduces the level of welfare.(4)The decline of China's capital openness is not effective in response to the negative impact of America's TFP disaster,but proper capital controls can raise China's welfare level.(5)With the increase of the pegging degree of China's monetary policy to the exchange rate,the negative impact of the TFP disaster probability shock on China's economic fluctuation is enhanced,the complete floating exchange rate system and the excessive attention paid by monetary policy to the exchange rate cause the loss of welfare in China.