Empirical Study Of The Economic Effects Of Fiscal Policy In China

Having been successfully implemented by the Chinese government from 1998, the active fiscal policy began to be the focus of public attention. The positive and negative effects of active fiscal policy also become the hotspot of economic research. To study thoroughly and roundly, we expand the research range and come to some valuable conclusions. We use qualitative analysis and quantitative analysis to study the economic effects of Chinese fiscal policy from 1978. This paper consists of five chapters, the main contents of which are introduced as bellow.Chapter I is introduction. This chapter includes the background of choosing the topic, the significance of this research, the related studies in China and abroad, research methods, and the main innovation and limitation. In this chapter, we introduce the whole paper briefly.Chapter II is the summaries of fiscal policy. First, we analyze the evolvement of the meaning of fiscal policy. In the west, the definition of fiscal policy emphasized its means at the beginning, then, it turned to emphasize its targets. In China, similar thing happens in the development of the public finance. At first, economists consider fiscal policy as the state's guidelines, principles, and behavior criterions etc. After economic reform and open, the meaning of Chinese fiscal policy has changed. The economists began to put emphasis on fiscal targets and put forward accurate definition. Secondly, we introduce the types of fiscal policy. Though we have many ways of classification, the usual way is to divide it into the automatic stable fiscal policy and the discretionary fiscal policy. According to the different roles on economic aggregates, the latter can also be divided into extending fiscal policy, tightening fiscal policy and neutral fiscal policy. Third, we introduce the economic effects of fiscal policy. It is the results of implementing fiscal policy. Because the effect range of fiscal policy is very wide and its results are different, the effects can be divided into many kinds from different point ofview. In this chapter, we mainly introduce three kinds of effects, which are increasing effect, crowding-out effect and risk effect, and thus we lay sound basis for the following chapters. At last, we give a brief review of Chinese fiscal policy from 1978. This period can be divided into three important stages, in which we present corresponding policy.Chapter III is about the increasing effect, which is the pushing effect on economic growth by having implemented fiscal policy. Firstly, we run back over the classic theory, modern exogenous theory and "new" or endogenous theory of economic growth, analyze the fiscal policy in the theory of economic growth and reveal the principles and ways by which fiscal policy speed up economic growth. Secondly, we have a positive analysis on the relationship between the fiscal policy and economic growth. We study the correlation between "GDP" and some important indicators such as government expenditures, government revenues, deficit, macro-burden of taxation, and balance of debts etc, then give the regression of those indicators and show the importance of fiscal policy on economic growth from positive view. At last, we use macro-econometric model for the analysis of the contribution of budgetary changes to economic expansion. The fiscal effects of annual changes of government sector budgets consist of discretionary, automatic, and total effects. Three kinds of formulas are derived from the model to measure these effects. Using annual data for the case of China, we can work out three kinds of effects by which government sector's contribution to economic growth can be analyzed.Chapter IV is about the crowding-out effect of fiscal policy, which is the outcome the fiscal policy acts on folk investment, consumption, capital accumulation, and output etc. First, we discuss the meaning and types of this effect. According to the condition of employment, this effect includes two kinds, which are in the situation of full-employment and non-full-employm...