The Effective Coordinationof Fiscal Policy and Monetary Policy
|School||Zhejiang University of Technology|
|Keywords||Fiscal policy Monetary policy A basket of currencies exchange rate system Comprehensive Performance|
A direct impact on the health of the economy as the most important means of macroeconomic regulation and control , with the effect of fiscal policy and monetary policy . July 21, 2005 , China carried out the reform of the exchange rate regime , from a single peg to the dollar fixed exchange rate regime with reference to a basket of currencies instead , a managed floating exchange rate system . Under the current exchange rate system , the study of fiscal policy and monetary policy mix has great theoretical and practical significance . The article first sort out the relevant theory and literature , identify the papers entry point. Innovative way, then as an entry point to the macroeconomic policy goals , in the context of the yuan to a basket of currencies exchange rate system , the use of co-integration test , impulse response function and variance decomposition method , both inside and outside of the two policies on economic growth , commodity prices and current account performance . The results show that the current exchange rate system , China 's fiscal policy and monetary policy performance are complementary , and a dominant position in fiscal policy , monetary policy due to the exchange rate regime clamped , continue in a passive position ; compared to monetary policy , fiscal policy on economic growth , the adjustment of the current account more validity ; current high rate of inflation , monetary reasons . Recommended the implementation of expansionary fiscal policy with a tightening of monetary policy ; reasonable use policy subtool ; improve the RMB exchange rate formation mechanism , a moderate expansion of the floating range of the RMB exchange rate , as soon as possible to enhance the independence and effectiveness of monetary policy .