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Crisis And Evolution Logic On The Government Intervention Theory Based On The Problem Oriented

Posted on:2015-05-25Degree:DoctorType:Dissertation
Country:ChinaCandidate:H ZhangFull Text:PDF
GTID:1109330464950167Subject:Western economics
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Western economics is a "problem-oriented" economics, Economic theory was constantly revised with the advent of the economic problem, such as the crisis. The development and evolution of government intervention theory is also "problem-oriented".In 2008 the US subprime mortgage crisis gradually evolved into a worldwide financial crisis, not only the developed countries, but also the emerging market countries and developing countries can not escape from this crisis. The happening of the crisis had put forward the challenge to the mainstream macroeconomic theory. And also made the new liberalism economic theory which occupying the mainstream status suffer the query from the Keynesian theory and its economic theorists. The reflection and correction on macroeconomics was on the horizon.The theory on government intervention is attached to the certain macroeconomic theory, and different schools have different theories of the government intervention. This paper combs the logic on the evolution of the government intervention theory from the perspective of the history of economic thought, and found that in different times and the backgrounds, facing with historical events, various schools core formed their own basic core theory. Then some different theory of the government intervention had derived, and then become the theoretical basis of the governing idea after each crisis. And also become the initial basis to deal with the next crisis. But the crisis will deeply affect the mainstream economics at that time, and lead to the change of the mainstream economics.The financial crisis happened many times in the history in western countries, the governments were faced with whether to take actively intervention, when to start intervention, and how to intervene in theory and in practice each time in the face of crisis. By reviewing the historical causes of each crisis and the intervention measures and effects the government took, we found that every crisis stems from external shocks. At that time the mainstream economic theory can not explain and cover them. Since the 1930s the mainstream economics has alternated between Keynesian and new classical economics after the Big Economic Crisis. Although after many times of crisis, the government intervention is mostly based on the Keynesian theory, which has both the amount of macro regulations and the perfect system of micro control, In the aftermath of the crisis of long-term the economic intervention is based on the theory of new classical economics and focuses on the market resources allocation.At the same time, we can also found that owing to the different external shocks which caused the crisis on each historical stage, the practice of the government intervention has not only the path dependence, but also the innovation. And the government intervention theory also has been improved constantly. The complements of the market micro systems are identical after every crisis. With the constant improvement of the market system, the time interval of the crisis is stretched, and the amount of government regulations is relatively decreased. However, it has brought us the further economic prosperity due to the more and more frequent technological changes and innovations. The destruction of the financial crisis has been getting more serious because the regulatory system had not been updated and upgraded. That is to say, the advocating market resources allocation of new classical economics will occupy the mainstream as well as the Keynesian which advocates the government macroscopic intervention will fade away if only the market of microscopic system constantly completed in the future.Due to the globalization and the rapid development of the economy and the technology, the power of financial innovation is becoming larger and larger. It led the financial crisis becoming the most severe crisis since the Great Depression last century because of the failure of the synchronous improvement of the financial institutions supervision system. During the period of the crisis, the government had been taking the active and powerful intervention that was based on the Keynesian theory. Due to the openness of the market, countries have paid more attention to the coordination of government intervention policy. As a member of the emerging markets, China also can not avoid the involvement of the crisis. After the crisis China has implemented a large-scale fiscal policy and a very loose monetary policy to cope with the crisis, In the intervention, countries had not only adopted the Keynesian macro total amount control, but also improved the system of market microstructure constantly such as the improvement of financial regulation system, etc.No matter the United States, China or any other countries in the world, their economy had gotten somewhat different degrees of recovery after the implementation of the active government intervention. However, the negative impact of government intervention of Keynesianism had been appearing constantly, such as the Europe’s sovereign debt crisis, the stubborn and high inflation problems in the emerging market countries etc. And those had made the cost of the government intervention become more and more significant. Then the measures of the government intervention would nearly withdraw. As the economy recovers, the macroeconomic intervention in the United States based on the theory of Keynesian will quit while the QE will gradually withdraw. Because the dollar’s special status, QE’s exit will have a significant impact on other nations, the influence on China can not be ignored. In this context, China should also deal with the relationship between government intervention and market resources allocation actively to enable the economy develop healthily and stably.Throughout the past crises, therefore, it can be seen that in the aftermath of the crisis period, new classical economics will remain the mainstream status, but the new Keynesian economics will never withdraw also. With the continuous development of the economy, the external shocks will become stronger and stronger. The crisis may also happen if there is no any system matching the micro market being established. The Keynesian government intervention will still play an important part in this short period of time in order to avoid the significant damage to the economy happen. If only the market system is improved, the frequency of the crisis will be decreased and the impact of the crisis on the economy will be weak. Then the Keynesian macroeconomic regulation and control will reduce gradually.
Keywords/Search Tags:Government Intervention, Financial Crisis, Macroeconomic Theory, Keynesianism, New Classicl Economics
PDF Full Text Request
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