The Impact Of Technology And Taxation On China’s Economy

In 2018,China’s economy has been under strong downward pressure.In order to reverse the economic downturn,the state has proposed to deepen the strategy of innovation-driven strategy,hoping to replace the traditional factor-driven strategy.In order to release economic vitality,promote innovation for all,and improve the technological content of China’s products,the state has introduced a substantial tax reduction policy.In this context,this paper has carried out research on the impact of technology and taxation on China’s economy.This paper decomposes technological progress into two parts: technological innovation and technological deepening,and treats these two parts as an exogenous random shock.By constructing the DSGE model,two shocks are introduced into the model to study its impact on the equilibrium steady state value and operating path of the economy,and to explore the effects of technology on economic growth and economic fluctuations.In the second half of the paper,tax is introduced into the model to discuss the negative intensity of taxation on the efficiency of the economy,and to simulate the impact of manufacturing VAT from 16% to 13% on China’s economic growth and economic fluctuations.By analyzing the steady-state value and impulse response function of the DSGE model and comparing with the actual economic cycle in China,the following conclusions can be drawn:(1)Compared with developed countries,China’s residents have longer working hours,lower capital use efficiency,less consumption in total expenditures,and greater room for domestic demand.This also means technological and tax have a great potential for the promotion of China’s economic growth.(2)Technology deepening and technological innovation have a significant role in promoting economic growth.(3)Taxation has a significant inhibitory effect on the economic vitality and economic efficiency of the economy.According to the calculation of the model,each 3% reduction in value-added tax can increase the long-term equilibrium output of the model by 1.5%,and increase the short-term steady-state output of the model by 3.3%.