Research On The Government’s Economic Policy In The Context Of The European Sovereign Debt Crisis

Based on the study on the background of the European sovereign debt crisis,this dissertation analyzes the root causes of the economic policy for the Europeansovereign debt crisis from the perspective of theoretical economics and holds that themain reason for the European sovereign debt crisis is the mistakes of thegovernment’s economic policies witch epitomizes the improper the economicintervention of Government during the crisis. This dissertation focuses on thegeneral theory of the function of the government’s economic policy under theconditions of modern market economy. Then this dissertation makes an analysis ofthe association between three economic crisis since the20th century and thegovernment’s economic policy mechanism and a review of the practice of thegovernment’s economic policy since the reform and opening up in China, verifies byboth domestic and international practice the "general rule" followed by thegovernment in the process of formulating economic policy, that is, it is important toreduce subjective intervention. Finally, this dissertation makes a reflection on thecurrent situation and problems of the economic policies of the Chinese governmentand proposes how the Chinese government should make adjustment in economicpolicy measures. The structure of this dissertation is as follows:The introductory section explains the research background and significance ofthe topic of this article, the basic structure and the main content, the researchmethods and major innovation.The first chapter is the literature review. It mainly describes the foreign anddomestic researches on the causes, prospects, influence, implications and countermeasures of the sovereign debt crisis in Europe, make an overview about thetheory of the government’s economic policy etc. in academic circles, andsummarizes a framework for the analysis of the government’s economic policyissues in the context of the European sovereign debt crisis.The second chapter analyzes the root causes of the economic policies of theEuropean sovereign debt crisis and holds that the basic contradiction of capitalism isthe institutional roots of the European sovereign debt crisis, the government’s wrongeconomic policies of countries in crisis are the root causes of the policies of theEuropean sovereign debt crisis, the unreasonable industrial structure is the structuralfactors of the European sovereign debt crisis, the "absence" of financial regulation isthe exogenous reasons European sovereign debt crisis. Finally, the analysis pointsout the fallacy of Keynesian economic policies of excessive government interventionin the economy.The third chapter is a theoretical construct part of this article. It summarized thegeneral theory of the government’s economic policy under the modern marketeconomy by analyzing and elaborating the general laws of the market economyoperation, the position of the government functions in the economic activity, theobjectives, the principle and the starting point of the government’s economic policy,government economic policy tools.The fourth chapter is the analysis of the correlation mechanism between thegovernment’s economic policy and the economic crisis. By reviewing and analyzingthe process and the mechanism of the three most serious economic crisis since the20th century: the Great Depression, the Stagflation crisis and the Sub-primemortgage crisis, it is concluded that all of the economic crisis are caused byexcessive government intervention from Keynesian economic policy.The fifth chapter is a systematic review of the Chinese government economicpolicy practice since the reform and opening up. It holds that Chinese government economic policy achieves a lot in promoting the economic growth. At the same time,however, there is the problem of government’s over intervention both in themacro-control policy level, medium guide policy level, or regulatory policy at themicro level leading in the damage of market competition mechanism, the low qualityof economic growth, the slow pace of structural adjustment and transformation andupgrading in industry and the inefficiency of some microeconomic operation. On theother hand, the government has repeatedly been in "absence" in relation tosustainable development and livelihood issues, leading to the threatening to theharmonious development of man and nature and damage to the welfare of thegeneral public. These problems are not conducive to the sustained and healthydevelopment of China’s economy and the construction of a harmonious socialistsociety.Chapter6makes a reflection and review to the status quo and problems of theChinese government economic policy and holds that the problems for thegovernment is the coexistence of "offside","absence" and "misplaced" in thecountry’s current economic policy, in which government economic excessiveintervention is a particularly serious problem. On this basis, it suggests some specificadjustment measures of the Chinese government economic policy: to reducegovernment intervention; to build a "limited government"; abandon the "Keynesian";to promote the development of the real economy; to reduce administrative monopolyand to promote competition in the market; to adjust income distribution policy toachieve endogenous economic growth; to give up the GDP worship and to achievethe harmonious economic and social development.With the knowledge of political economics, economics of governmentregulation, economic history and finance economics, employing a variety of researchmethods, such as historical analysis and comparative analysis this dissertation makesa deep-level, all-round, multi-dimensional study of the government’s economic policy issues in the context of the European sovereign debt crisis and establishes aframework for a broader perspective, more complete analysis of the government’seconomic policy issues, and makes innovation in the following aspects:Firstly, on the basis of combing the research of scholars, deeply analyzes of theroot causes of Europe’s sovereign debt crisis. Current domestic and foreign scholars’research concerns mostly on the causes of the crisis, prospects, impact, inspirationand countermeasures the of the European sovereign debt crisis. However thesestudies focused on the description and analysis of the representation of the Europeansovereign debt crisis, with little analysis of the root causes of the European sovereigndebt crisis from the perspective of political economics, and thus lack of deepunderstanding of the nature of the European sovereign debt crisis and profoundreflection and review of the government’s economic policy. From the perspective ofpolitical economy, this dissertation makes a comprehensive analysis of theinstitutional roots, policy roots, structural factors and exogenous reasons of the debtcrisis and points out that the government’s wrong economic policies of countries incrisis is the main reason for the crisis.Secondly, this dissertation has questioned the current widely prevalentexcessive government intervention with the distinctive characteristics of theKeynesian economic policy. Most of the existing research on the issue of thegovernment’s economic policy takes Keynesian as dogma and standard whichoveremphasize the importance of government intervention in the economy andignore the law of development of the market economy. From the analysis of thegeneral theory of the role of the government’s economic policy under the conditionsof modern market economy, this dissertation focused on the test on the mechanismof association between the most serious of the three economic crisis and thegovernment’s economic policy since the20th century and illustrated that Keynesiangovernment’s excessive intervention in economic policy is the key reason for the economic crisis which will bring disastrous consequences for a country’s economy.Finally, through theoretical analysis and historical test, this dissertationanalyzed the path how the Chinese government adjust the economic policy in thecontext of the European sovereign debt crisis. Most of the existing domestic researchon the issue of the government’s economic policy is either confined to the domesticor to foreign countries, or in one aspect of macro-control policies or medium-guideand micro-regulation policy which lack of a more comprehensive analysis anddemonstration. From the macro, meso and micro levels, this dissertation makes asystematic review of the practice of the government’s economic policy in Chinasince the Reform and Opening up and a comprehensive and profound reflection onthe status and problems of the economic policies of the Chinese government,proposes the specific adjustment path of Chinese government’s economic policy inthe context of the European sovereign debt crisis.