The Analysis For Macroeconomic Fluctuation In China During Transition

Substituting for the shortage and inflation, surplus and deflation become the main characteristics of macro-economy in China since the second half of 1990s. To promote economic Growth and employment, the central bank continually reduces the interest rate of loans and deposits, and the government over-issues 660 billion public debt coordinated with 1.2 trillion loans from commercial banks in total during the period from 1998 to 2002. All these measures fail to expectation, however. To logically analyze and interpret above facts, both in theory and practice, is necessary.In accordance with the latest development in macroeconomic fluctuation theory, a theoretical framework for the analysis of macroeconomic fluctuation is established in this thesis based on the behavior of the economic agents (firms and residents) in China. According to it, the following facts, which are difficult to explain in line with what is in the economics textbook, are consistently analyzed and interpretedContinual falling of the consumption propensity of residents in China since 1990s;The reason the value of M2/GDP is much higher in China than other countries in the world at the corresponding period;The causes of deflation in China;The reason the macroeconomic policies, especially monetary policy, fail to work;The reason the growth both output and price level comes into being instead of stagnation when the price of oil rises;The reason the two objectives of monetary policy failed to accomplish simultaneously;The stability of macro-economy in the case of controlled interest rate and exchange rate At the end of this thesis, some suggestions are put forward to accomplish the continuallyrapid growth for Chinese economy, starting the rising of consumption with fiscal policy, ensuring the stable operation of macro-economy with monetary policy, and facilitating the adjustment of economic structure with industrial policy.