Balanced National Income Theory Model Introducing Transferring Land Fee And Its Policy Implication

Currently, from the angle of national macro-control, there are few researches on national income theory introducing land grant policy.Up to now, there has been neither a clear idea of the transmitting mechanism of land grant policy affecting macro-economy nor a comprehensive and systematic framework consisting of fiscal policy, monetary policy and land grant policy. Therefore, the research on balanced national income theory model introducing the land grant policy variables and its policy implication is of essential guiding significance to the macro-economic policy-making study.Based on the background that land grant policy has been involved in macro-economic regulation, this paper starts from analyzing the nature of land transferring fee from national income circulation. And then, this paper revises our country’s national income accounting to include land grant and gives the model for our coutry’s national income circulation of four sectional economic body as well as national income accounting identity isolating the land market from other factor markets. Based on the above study, the paper builds the balanced national income theory model introducing land transferring fee. which is the result of revising the Keynes’effective demand theory and IS-LM model as the core theory of the western mainstream macroeconomics.Finally, policy suggestions are proposed based on the experimental results. The following conclusions have been made:(1) From the source, land transferring fee is nothing more than value-added income that local government gets in the process of farmland conversion and land devlempent through the rights of planning and eminent domain, which requires farmland must be first appropriated by government and then could be seld for the urban construction in the market.(2) Tracing study on the national income accounting system in China shows that GDP measured by income method does not take the land rental income into account) which makes the GDP data reported by government smaller than its real value. And at present, there are two viewpoints about how to deal with land grant in GDP calculation in China:1) land transferring fee is rent of the grant land,2) land transferring fee is the value of the lease. By comparing the theories and the technical difficulty for feasible schemes of the above two ideas, this paper prefers to the second one. which is more suitable for land leasehold system and the enterprise accounting system in China. Following the treatment method of land and underground assets calculation in Canada before1993SNA, it needs to create a virtual industry department for land grant in input-output table to calculate its output value added.(3) Isolating the land market from other factor markets, the paper revises the model of four sectional economy cycle diagram, an abstract description of one country’s economy in the western mainstream macroeconomics. On this basis, the paper gives the identity of the national income accounting of China.(4) Based on Keynesian theory and IS-LM model popular in the western mainstream macroeconomics, this paper proposes a balanced national income model introducing land transferring fee based on China condition. In this model, land transferring fee is spent together with fiscal revenue and has similar impacts on national income, that is to say, the land transferring fee revenue is equal to the reduction of national income having contractionary effect on the balanced national income, and the converse is also true.(5) In order to meet the demand of empircal study,the paper makes some data correction:1) land transferring fee is regarded as the value added output in GDP caculationas, and the sum of both GDP reported and land transferring fee replaces the GDP issued by department of statistics,2) strip out the currency effect to macroeconomic variables by GDP deflator.(6) Then an empirical study on balanced national income theory model introducing land transferring fee is made, which estimates the balanced national income equation and macro-economic policy multipliers in this model. The result indicates:1) the policy multipliers of urban construction land supply, monetary supply, government purchase and government transferred payment to balanced national income respectively are0.0120,0.1144.3.0918and1.0774.2) It should be stressed that urban construction land supply has positive and negative effects on the balanced national income at the same time:the positive multiplier is0.0185and the converse is-0.0064. thus, the comprehensive multiplier effect is0.0121.Besides,compared with the classical model of western mainstream macroeconomics, monetary multiplier and fiscal multiplier in the revised model are greater.(7) After simplifying assumption of the aforementioned model, the paper continues to explore the relationship between land transferring fee system and monetary policy. The results indicate that the land transferring fee expenditure is equal to monetary activism, having directly expansionary effect on money supply. On the other hand, the land transferring fee makes money flow into government from the private sector having the contractionary effect on money supply. Hence, the comprehensive effect of the land transferring fee system on monetary depends on the above two aspects.(8) The paper continues to simplify assumption of the aforementioned model,and theoretically derives balanced multiplier of the land transferring fee system, following the theory of government fiscal balanced budget multiplier.Its value is greater than or equal to1, which indicates that the land transferring fee system is along the economic cycle, increasing instead of ironing the economic fluctuation.(9) Based on the facts that land transferring fee has been the second financial revenue of local government.The paper explores the spatial distributions and its influence on local GDP by using provincial data. The results show that:1) The ratio of land transferring fee to local GDP decreases gradually from the east to the west.2) Empirically study on economic growth theory model introducing land transferring fee with the OLS and SEM methods indicates that elastic coefficients of land transferring fee to local GDP is smaller than that of social fixed assets investment and the government general budget expenditure.3) Geographically weighted regression empirical study (GWR for short) shows the spatial diversity of influence coefficients for every source investment to the local GDP.In the end. this paper proposes a systematic framework for land grant policy taking part in adjusting economy macroscopically, including the ultimate goal, intermediate goals and transmission tool. The paper further makes sure the position and the role of land grant policy in macroeconomic control. Furthermore, this paper gives suggestions to the government to pefect the land grant policy as a component part of aggregate demand management policy for macroeconomic control.