Capital Market Development And Fiscal Institutions Change

Look from the surface only, the capital market and public finance are two kinds of mechanisms that allocate resources, but in substance, they are two kinds of institutional arrangement for individual transactions. From the view of transaction cost, both of them have institutional substitute relationships based on the compare of transaction cost when they allocate capital resources. And to the practice of market reform in China, those relationships mean that China market reform and capital market development are overall processes to lower the social transaction cost by substituting market for government and developing capital market for public finance. And from the view of the property rights, both of them have endogenetic relationships. Nations ordain the property rights structure, and it is a source to affect the capital market efficiency. But nations need to ordain the specific property rights structure to obtain the rent from public finance, which reflect on the Chinese institutional change as follows: The nation and its public finance demands play a key role in capital market development, but the nation's unilateral demand of public finance to obtain the rent caused the predicament in capital market. The public finance demands to obtain the rent for nation making our capital market system substitute has dualism in similar market and similar finance, and not the substitute of full marketability. This substitute is a key success to Chinese history reform, but also a source to the predicament of further reform in the future. And only the market and capital power are strong enough and set up the public finance constitutional system under which condition that the nation' s unilateral behaviors to obtain the rent for a short time can be effectively limited, and the market transaction cost can be reduced and the return growth can be harmonized with nation' s finance benefits, the basic system structure for capital market and the whole market economic can finally be established.This text includes five chapters.Chapter one <>This chapter investigates the relationship between the capital market and public finance from the non- institutional view: From theview of microeconomics they are two different mechanisms of public and private production and finance; But from the view of'macroeconomic, they are two different mechanisms of medium save and investment. This chapter furthermore investigates the relationships between the capital market and the public finance , and describes the substitute and endogenetic relationships from the transaction cost and property rights, and advances some concrete analysis to capital market and public finance.Chapter two<>This chapter describes the endogenetic relationships between the market and government, and reach a conclusion based on the investigation of the economic history of Western Europe: Accompany with the early development of Western Europe market economy and the form of different nations, the developing market is the results of the trading order expand of market division and cooperate between nations to obtain the finance benefits; Nation and its public finance benefits are the key success of the capital market and the whole market economic development, however the nation' s unilateral demand to obtain the rent from the public finance are the sources which hinder and threaten the effective property rights structure in capital market and the whole market economic; The establishment of the public finance and its budget system has a constitutional decision meaning to the development of capital market and the whole market economic. It strongly limits the nation's behaviors to unilateral obtain the rent and conquers and limits the "North paradox" in more degree, and establishes the basic system structure for the real devel...