An Empirical Study On The Effectiveness Of China’s Fiscal And Monetary Policies And Their Combinations

Fiscal and monetary policies are important means for the country to conduct macro-control.In the long-term regulation and control process,the economic society have formed an orderly policy transmission mechanism,which transmitted policies to the real economy and produced the expected policy effects.Since China’s economy entered the new normal,structural problems such as overcapacity have been prominent.The society has comprehensively carried out supply-side structural reforms,and various economic problems need to be resolved urgently.Therefore,how to coordinate fiscal and monetary policies to achieve optimal economic benefits has become a top priority.Therefore,this paper conducts an in-depth analysis of the macro-control effects of China’s fiscal and monetary policies,and clarifies the relationship between policies and economic.First,using cross-regression analysis and Granger test and other methods to analyze the periodicity and effectiveness of fiscal expenditure policy and taxation policy,it is found that in China’s fiscal policies,government expenditure policy is procyclical and taxation policy is inverse Periodic.However,the procyclical fiscal policy cannot effectively stabilize the macroeconomic fluctuations and has a weak ability to withstand risks.Therefore,the government must make corresponding adjustments,first of all,it must constantly improve the social security system,and secondly,it can improve the fiscal policy decision-making mechanism and the improvement of the budget management system is also crucial.Then,based on the TVP-VAR model,this paper compares and analyzes the mechanism of the two monetary policy intermediary targets,the money supply and the nominal interest rates,on the macroeconomic mechanism,and obtains the following conclusions.In terms of the impact on inflation,since the economy entered the new normal,the regulation of nominal interest rates has been more robust;in terms of impact on economic growth,the regulation of nominal interest rates on real economic growth is also more significant,the period of the quantitative monetary policy’s impact on the growth of the real economy is too long,so it is no longer suitable as a monetary intermediary indicator for regulating the macro economy.However,it should be pointed out that the current reform of China ’s interest rate marketization and the construction of the interest rate corridor mechanism have not yet been completed.At this stage of economic transformation,a single monetary policy tool may not be able to achieve multiple macro-control objectives.Intermediary targets should be inclined to hybrid intermediary tools.On the basis of enhancing the effectiveness of the money supply,we should accelerate the establishment of a sound interest rate marketization system.Finally,by constructing a VAR model,we identify the combinations of fiscal and monetary policies under different economic situations in China,and study the effectiveness of fiscal and monetary policies.The main conclusions are as follows: the two major policies are closely related to economic growth,and economic downturn is accompanied by the policy combinations of " loose fiscal policy and tight monetary policy",the upward trend of the economy is accompanied by the policy combinations of " tight fiscal policy and loose monetary policy";the expansionary fiscal policy can stimulate economic growth in the short term,but in the long run,economic growth will be undermined by the “extrusion effect” and excessive deficits.Expansionary monetary policy will help economic growth in the short term,but it will also cause price increases in the long run and damage economic growth.However,it should be pointed out that the use of a single policy at this stage cannot achieve multiple regulatory objectives.The coordination of fiscal and monetary policies is essential to economic operation.Therefore,we must comprehensively measure policy objectives and effects when formulating policies,and establish an interconnection mechanism between policy implementation departments.