An Empirical Analysis Of The Coordination Mechanism Between Monetary Policy And Fiscal Policy

In order to improve the quality of macroeconomic operations and effectively prevent"market failures" and timely respond to changes in the economic situation,governments have actively used monetary and fiscal policies and other policy tools to effectively regulate the macro economy.However,due to the different regulatory objectives,transmission paths and policy effects of monetary and fiscal policies,the coordination of monetary and fiscal policies is not only conducive to the effective realization of policy objectives,but also helps to reduce policy risks and implementation costs.At the same time,the theoretical study of the policy coordination mechanism is also one of the academic issues of academic concern.In order to explore the optimal equilibrium strategy of the policy coordination mechanism under the established policy objectives of monetary policy and fiscal policy,firstly,based on the model function of other scholars,this paper obtains the extended IS-LM which determines the coordination between the real interest rate and the fiscal deficit rate.model.In the consumption function and investment function,the influence of interest rate on the coefficient is considered,and the consumption function and investment fnction with the coefficient changing with interest rate are established.Secondly,the internalization of government expenditures,drawing on Wang Xin(2013)established a government expenditure function for internalization.Finally,the output function determined by the real interest rate and the fiscal deficit rate under the equilibrium of the product market is obtained,that is,the IS model.In addition,using the deformation of the monetary quantity equation,the inflation rate is expressed as the growth rate and output of the money supply.The function of growth rate.At the same time,the nonlinear money supply equation determined by the real interest rate and the fiscal deficit rate is introduced,and the inflation rate function determined by the real interest rate and the fiscal deficit rate under the equilibrium of the money market is obtained,that is,the LM model.Then,through the smoothing process,the simultaneous equations model containing endogenous policy variables is obtained.Among them,the output function represents the objective function of fiscal policy,and the inflation rate function represents the objective function of monetary policy.Further,by identifying and estimating the model,it is possible to derive the objective function of monetary policy and fiscal policy that are coordinated by the actual interest rate and the fiscal deficit rate.Furthermore,the static fitting method was used to evaluate the fitting effect of the model,and it was found that the fitting effect of the model was very good.Finally,the actual economic situation since the 1980s is analyzed.In particular,the policy equilibrium simulation analysis was carried out in 1988,1998,2008 and the new economic normal in 2016.The study finds that when the economic fluctuations are large,the model can obtain the optimal policy mix of real interest rates and fiscal deficit rates to achieve policy objectives.Compared with the actual economic policies adopted in China,this policy combination can promote economic realization more effectively.Policy objectives.However,when the economy is running smoothly,the optimal policy mix that satisfies the equilibrium situation in this paper has a weaker impact on the economy than the actual adopted policy,but at this time,the optimal policy portfolio can still provide direction and ideas for policy formulation.Therefore,policy coordination research based on real interest rate and fiscal deficit rate can provide certain theoretical basis and quantitative reference for the formulation of China's monetary policy and fiscal policy.