Economic Growth Effects Of The National Debt Policy Research

The developed country in the west begin to use deficit policy to improve economical growth based on the Keynes theory after 1929,and bond policy emerging in most country. In fact, bond policy play a big role on engining economic growth . In recent years, the position and role of our government bonds have become more and more important, the scale expands and the characteristic of market is strengthened . In some degree, bonds policy enhance the scale of government investment, promoting enterprise's investment and fasting our country's economic growth. But the increase of bonds scale lead to deficit problem and government payment burden. During this period, many analyst and researcher say that government bonds should be give way to monetary policy . In this paper, we talk about the economical effect of government' bonds policy to see how it affecting economic growth.Short-period stable of economic growth is the basis of long-period growth. The main factor affecting economic growth is gross demand of this society. Bonds policy affect economic growth through affecting gross demand. Gross demand includes individual expanding, enterprise's investment, and government expanding in a closed country .Bond policy affect gross demand through playing role on these three factors. Fist, bonds scale's increasing leads to higher interest rate, which reduce the net value of future income and asset. But the effect of bonds' instead of tax give the people illusion of the increasing value of income, which promoting people expand mostly. In theory, bonds policy leads to a higher level of individual expending. Second, bonds policy crow out enterprise's investment because of it's promoting a higher interest rate. Third, bonds policy has great affect on government expand through two way, one is that bonds issuing give government new way to increase government income, which lead to government expending increase fast. The other is that government investment induce more and more factory invest which lead to a higher level of society investment. Generally speaking, bonds policy means a greater gross demand of a country.Long-period economical growth depend on labor, capital, technology progressing and etc. The former researching of economic growth based on the developed country's data, which show that technology progressing play a most important role in promoting economic growth. But, if we begin our research based on the developing country, the result is different, capital is most important. Bonds policy promote asset collecting through government investment which lead to a higher level of individual investment. Of cause, it will increase economic growth rate.In a open country, the factors affecting economic growth include international business and oversea capital flow. So does bonds policy's economic effect. Bonds policy effect a opening country's economic growth through affecting interest rate and exchange rate which lead to change of import and export, and capital flow.In our country, bonds policy increase gross demand in greatly scale through investment. But it show a different effect in our life from theory, such as bonds policydoesn't improve interest rate to a higher level, it doesn't have crow out effect in china, contraryly, government investment leads to a more and more individual to invest, of cause , it has a different effect on individual expending with crow out effect. With the opening process, bonds policy begin to have some effect on import & export and capital flow.Bonds policy leads to a fast economic growth, at the same time, fast economic growth enhance the sustainability of bonds policy. With the more and more fast growth rate, the risk of bonds scale become less dangerous than some analysts said.