The Linkage Analysis Of The Internal And External Balance Development Of An Open Economy

Under the conditions of an open economy, internal and external economy are the two aspects of the national economy, internal and external balance become two main goals of macroeconomic. How to achieve the goals of internal and external balance of an open economy is the major challenge that macroeconomic is facing. With the ever-deepening degree of the world's economic integration,as two parts of macroeconomic,internal economic and external economy impact and constraint each other, with the growing degree of integration of the world economy, the interactive relationship between the two markedly increased. Thus, reaearch the linkage relationship and the conduction mechanism behind the formation, is of great practical significance to promote the coordinated development of both as well as to achieve internal and external macroeconomic equilibrium.Using modern tools of economic analysis, combining theoretical analysis and empirical analysis, the writer research and explore the linkage relationship between the balance of internal economy and external economy, and finally based on the empirical analysis, this paper gives the relevant policy recommendations on the adjustment of the internal and external economic balance of China.This paper has five parts:Part One - Introduction: a brief introduction of the problem background, research statusresearch content , research methods and creative point;Part Two - Internal and external balance study and related literature review to Open economy and the define of the concept: review the results of research of domestic and foreign scholars, define and introduce the internal and external balance of economic development, put forward the three areas of the linkage relationship of economic balance: (1) Whether there is a correlation between the internal balance and external balanc; (2) Whether there is a long-run equilibrium between the internal economy and external economy and what are the characteristics of it; (3) Whether there is a causal relationship between the internal balance and external balance. At the same time, give a brief summary of the results from domestic research scholars.Part Three - the theoretic analysis of the equilibrium linkage relationship between internal and external of an open economy: analyzes the adjustment theory of international balance of payments and the logical theory of the equilibrium linkage relationship between internal economy and external economy in the framework of purchasing power parity theory, and also introduce the interaction of economic imbalance between internal economy and external economy from the perspective of demand and investment gap;Part Four - the empirical analysis of the equilibrium linkage relationship between internal economy and external economy in China: use quantitative analysis methods to do empirical test for the linkage relationship between internal economy and external economy in China from 1982 to 2007, get the linkage relationship: a high degree of relevance and long-run equilibrium relations, internal economic balance and external economic balance are Granger reason to each other.Part Five - Conclusion and Revelation: it is a brief introduction on the research results, and describes the linkage relationship between internal economy and external economy. At the same time, it gives advice on policy making to achieve the balance between internal economy and external economy in China.