Research On The Appropriate Scale Of China’s National Debt

Currently, with the continuous expansion of the scale of the national debt in China, the research on the issue of appropriate scale of national debt in our country is more and more important. No matter the size of the debt is too small or too large will affect the stability of economic development in different ways. Therefore, this paper has very important practical significance for the research on the appropriate scale of national debt.This paper mainly uses the index analysis method and the econometric analysis method to discuss the scale and the factors of national debt. The results of the index analysis show that the size of the national debt is too large; the space to expand the scale of national debt is too small. In the econometric analysis part, this paper bases on the Vector Autoregressive(VAR) Model and the Vector error correction(VEC) Model to do empirical analysis of factors which had important impacts on national bonds during 1981-2013. The results show that the most important factor that influences the scale of national bonds is dweller’s savings, repayment of capital and GDP. Whereby, the scale of national bonds is positively correlated with dweller’s savings and GDP, and negatively correlated with repayment of capital. From the short-term perspective, the most important factor that influences the size of public debt is financial deficit, and the main purpose of the bond issue is to achieve the balance of financial revenue and expenditure.On the high pressure of our country economy downward, in the foreseeable future, the scale of China’s national debt will continue to expand. Therefore, the relevant departments should control the scale of national debt. They can’t blindly pursue fiscal balance, but should give more consideration to the national macroeconomic control, in order to promote the stable development of economy.