Dynamic Effects of Government Spending Shocks in China
|School||Dongbei University of Finance|
|Keywords||The impact of government spending SVAR model DSGE model|
2003 to 2007, China's economy to achieve a new round of rapid growth, GDP annual growth rate of over 10% for five consecutive years. In 2007, the GDP annual growth rate jumped to 13% reach the vertex of the new century rise of the economic cycle, the creation of the Chinese miracle caused great concern to the world. However, the rapidly changing international financial and economic situation. In the end of 2007, the outbreak of the U.S. subprime mortgage crisis, and then rapidly evolved into a global financial and economic crisis. The huge decline in response to asset prices, rising raw material prices and the resulting confidence weak, governments have taken a package of expansionary fiscal policy and monetary policy to stimulate the economy. In the face of the slowdown in economic growth, the Chinese government at the end of 2008 the limelight, \A long time, there are two diametrically opposed views on the status and role of fiscal policy to stabilize economic fluctuations have been. The first view is that when the economic downturn caused by the deviation from the equilibrium in the market, rather than by fundamental factors of the market, such as reduced productivity caused fiscal policy should play an active role, this view, the government should take discretionary fiscal policy. The second view is that fiscal policy is generally ineffective, and sometimes even make the situation worse, because there is a longer time lag effect, fiscal policy and its implementation will produce a series of economies distorted. Therefore advocate the use of automatic stabilizers rather than discretionary fiscal policy as a tool to stabilize economic fluctuations. In view of this, the article attempts to use the analytical tools of modern macroeconomics, dynamic stochastic general equilibrium (DSGE) model analysis of dynamic effects and conduction mechanism of Chinese government spending shocks. From the theoretical level to explore and accurately analyze exactly what kind of government spending is the most effective to stabilize economic fluctuations tools and measure from the experience level 4 trillion investment stimulus to private consumption, private investment has Crowding in or Crowding and the dynamic effects of other important macroeconomic variables, in order to provide guidance and reference to the role of macro-control in the future. This paper concerns mainly two-fold: first, to determine the neoclassical or New Keynesian paradigm is more suitable for the analysis of the dynamic effects of government spending shocks, which is the theoretical significance; Second, based on empirical data and empirical research to identify the impact of various types of government spending in the dynamic effect of the product on the market, that is, to identify the types of government spending is the most effective to stabilize economic fluctuations tools, this is the practical significance of this paper. This paper follows the analysis of modern macroeconomics general steps: First, the dynamic effects of stylized facts based on empirical data to identify government spending shocks; Second, build a DSGE model (artificial economic) identified to match the stylized facts. The text is divided into five chapters, specific structural arrangements are as follows: Chapter 1, Introduction. Discusses the research background and significance of the topic, and gives specific structural arrangements. The second chapter, the literature review. Comprehensive combing research status at home and abroad, by comparing the research status at home and abroad, to point out the inadequacies of the existing domestic research leads this study on the basis of ideas. Chapter, the Chinese government spending shock stylized facts of the dynamic effects. First, a comprehensive review of the three categories to identify government spending shocks general method of dynamic effects, including \Then combined with the actual situation in China, using SVAR method to identify the Chinese government spending shock the stylized facts of the dynamic effects. Chapter one covers the neo-classical and new Keynesian DSGE model. In the third chapter stylized facts based on build a dynamic stochastic general equilibrium model, based on the different settings of the model, the model encompasses two types of models - there is no price stickiness neoclassical model and the presence of price stickiness new Keynesian model. To identify what kind of paradigm is better able to match the stylized facts on Chapter conduction mechanisms and in accordance with the theoretical model to analyze the impact of various types of government spending. Chapter V, Conclusion. Concludes the paper, given the main conclusions and policy recommendations. And pointed out the inadequacies of this study and further research outlook. Innovation of this paper are three things: first, to explore the dynamic effects of government spending shocks from a dynamic stochastic general equilibrium perspective; constructed include neo-classical and neo-Keynesian DSGE model, judging from the theoretical level New Keynesian paradigm is more suitable for the analysis of the dynamic effects of the Chinese government spending shocks; anatomical structure of government spending, to distinguish different types of government spending shocks dynamic effects.