Study On Coordination Of Fiscal And Monetary Policies In China's Macroeconomic Control

New requests have come to the theory and practice of macroeconomic regulation and control during the new era,new normal and supply-side structural reforms.Strengthening its coordination between fiscal policy and monetary policy is quite significant,because they are two important macroeconomic policies and their coordination will achieve the goal of macroeconomic control effectively.This paper expounds the basic concepts of fiscal policy and monetary policy and their coordination in macroeconomic regulation and control.After reviewing relevant literature and theories,comparing the differences and relations between China's macroeconomic regulation and control and western countries state intervention theories,etc.This paper puts forward that macroeconomic policies should balance the relationship between short-term and long-term,supply and demand management,economic stability and structure adjustment,speed and quality,and then establishes a basic framework of coordination between the two policies.Coordination between the two policies should be strengthened to effectively achieve the goal of macroeconomic regulation and control.In the short term,aiming at smoothing the large fluctuations to maintain economic stability,demand management advantages should be taken by appropriate government investment.In the long run,aiming for economic restructure and upgrading to realize sustained and high-quality economic growth,supply management should be used by implementing systems and stimulating market vitality.Meanwhile,coordination between the two policies' instruments should be strengthened to enhance efficiency.The paper reviews the development of the coordination between fiscal and monetary policies in the United States since the Great Depression,Japan and Germany since World War II,especially the coordinated policies dealing with 2008 international financial crisis.This paper introduces China's historical evolution of the coordination between the two major policies,especially since China has entered into the socialist market economy system.In addition,it sums up international lessons of the two coordinated policies,including jointly stabilizing the economy,optimizing the structure to promote economic growth and using national debt to achieve the objectives of the two policies effectively.This paper uses different empirical analysis methods to analyze the situation of the two major policies in maintaining economic stability,optimizing economic structure and strengthening their policy instruments,reaching relevant conclusions and exploring the existing problems and reasons.Firstly,the VAR model is used to analyze the relationship between real GDP growth rate,deficit rate and broad money supply M2.The research proves that the change of broad money supply is usually similar to the change of GDP growth rate;Changes in fiscal deficit rates are usually on the contrary to GDP growth.Deficit fiscal policy may induce an increase in broad money supply in the short term,but in the long run it will be detrimental to economic growth due to crowding out benefits.The broad money supply has less impact on the deficit while increasing output in the long run will cause inflation.The specific type combination of fiscal policy and monetary policy depends on the specific macroeconomic situation and the comprehensive weighing their objectives.The analysis believes that fiscal policy,monetary policy and economic growth interact and influence each other,and both policies have time-limited effects.The fluctuation of government investment has great influence on economic growth.The strength of macroeconomic policy implementation needs to be controlled,especially taking into account the enormous role played by local governments and financial institutions in policy transmission.Secondly,panel data models are used to analyze the impact of the two policies on the industrial structure in the whole country and the East,Middle and West regions.The study found that the influences of the two major policies on industrial structure in each region are different,and it is difficult to exert synergy in the adjustment of industrial structure in each region.The analysis holds that the role of any policy to adjust structure alone is limited,and the two major policies lack of a comprehensive coordination mechanism and matching ports for their implementation.The local conditions and their implementation styles vary greatly,so policy results are different.Thirdly,from the balance sheet of the central bank I can see the use of national debt to enrich foreign exchange investment cannot solve the problem of basic currency supply caused by foreign exchange fluctuations.The VECM models are used to analyze the impact of Treasury cash on cash in money circulation(MO),narrow money supply(Ml)and broad money supply(M2).The studies find that the impact of Treasury cash on the money supply is generally limited:the maximum contribution rate of Treasury cash to MO change is 35%,the maximum contribution rate to M1 change is 10%,and the maximum contribution rate to M2 change is only 6%.The analysis believes that national debts were held little by the central bank,the liquidity of national debt market was weak,and the bonds term structure and issuance management were hard to meet the needs of the open market operation,all these reasons affected the use of national debts.At the same time,the scientific forecast and the management of the central Treasury cash should be improved.This paper puts forward the strategic basic mechanism and relevant advice for coordination between fiscal and monetary policies in macroeconomic regulation and control,under the background of the new normal,the supply-side structural reform,the new international situations and the empirical analysis conclusions.It suggests that maintaining the economic basic stability should be focused on in the short term by active fiscal policy and prudent monetary policy,taking advantages of demand management with appropriate government investment,preventing the systemic financial risks by utilizing the advantages of central government bonds.In the long run promoting structural adjustment to achieve high-quality economic growth should be focused on,taking the advantages of supply management to support scientific and technological innovation,promote relevant market entities to transform economic growth momentum.At the same time,central government debt and Treasury cash in central bank should be made more use of to increase initiative of the base money supply adjustment.