A Study On The Effect Of Public Debt In China's Macrocontrol

In modern market economic system, national debt is not only the means of fiscal policy but also the channel of enforcement of monetary policy. With the initial establishment of the socialist market economic system in China, national debt plays an important role in macrocontrol. Therefore, it is necessary to profoundly study the effect of national debt in the enforcement of macro-policy. On the basis of previous research, this thesis studies the effects of fiscal and monetary policies of national debt, analyzes the role of national debt in macro-policies coordination, and puts forward some measures to improve the operation of national debt. It uses research methods of combining the theoretical analysis with positive analysis of experience and combining the qualitative analysis with the quantitative analysis.This thesis's contents are as follows: Firstly, we review the Public Debt Economics of different schools, and briefly introduce the history of practice of national debt in China, then pose the topic of thesis. Secondly, we discuss the effect of the fiscal policy of Chinese debt. On one hand, Lerner Effect illustrates that expansion of national debt can increase consumption demand, which is supported by our positive analysis. On the other hand, Squeeze-out Effect illustrates that expansion of national debt can reduce nongovernmental investment, which isn't supported by our positive analysis. Therefore, it is possible and necessary to continue to carry out the expanding fiscal policy. Thirdly, we discuss the effect of monetary policy of Chinese debt. According to theoretical analysis, the circulation of nation debt has an vital impact on monetary supply, interest rate and stock price. Our positive analysis shows that owing to the transition of financial system, Chinese debt obviously influences monetary supply, but does not influence interest rate and stock price. Therefore, China should develop bond market and promote the reform of the rate system. Finally, we analyze the role of national debt in macro-policies coordination. On the basis of theoretical analysis and positive analysis, we suggest developing to open market operation to improve the effectiveness of marco-policies cooperation.