Theoretical And Applied Research On Monetary And Fiscal Policy Coordination Mechanism

Macroeconomic regulation refers to the government's selection of appropriate macroeconomic policies to achieve its regulatory objectives based on the state of the national economy and the characteristics of the economic management system.When the economy is facing downward pressure,it is difficult for the government to rely on a separate monetary policy or fiscal policy to play its intended role,and coordination between policies can produce synergies and improve the effectiveness of policies.At present,China's economic growth is slowing down.It is facing the challenges of the disappearance of demographic dividends,overcapacity in traditional industries,and insufficient growth momentum in the world economy.It is particularly important to achieve high-quality economic development and strengthen policy coordination.Therefore,how to strengthen the coordination between monetary policy and fiscal policy and effectively achieve the goal of macroeconomic regulation and control is a matter of great concern to both the theoretical and practical circles.Currently,most scholars use the traditional IS-LM model and the DSGE model to study macroeconomic policies and the coordination effects.Among them,the traditional IS-LM model conducts policy research from the perspective of macroeconomic equilibrium,focusing on total analysis,while monetary policy and fiscal policy are exogenous in the model,lacking the portrayal of the endogenous mechanism of policy.In addition,when using the DSGE model for policy research,the model establishes a general equilibrium by adhering to various market clearing rules,but the complete clearing rules do not meet the "experience basis" required by the policy analysis model.At the same time,the monetary and fiscal departments of the model are subject to established policy decision rules(such as Taylor rules and strict fiscal budget balance rules).Therefore,the study of monetary policy and fiscal policy does not reflect the interaction and coordination mechanism between the monetary department and the financial department.In view of this,in order to more accurately portray the coordination mechanism between China's monetary policy and fiscal policy,analyze the policy effect changes under the coordination mechanism,and strengthen the coordination between the policies to provide theoretical support.The article combines the actual economic characteristics of China and the basis of previous research results.The following three aspects of research have been carried out:First,in order to portray the endogenous mechanism between monetary policy and fiscal policy,firstly,the article introduces an endogenous government expenditure policy and establishes a money supply equation determined by the combination of interest rate and fiscal deficit rate,expanding the traditional IS-LM model.Secondly,this paper conducts logarithmic linearization processing and parameter calibration for the simultaneous equations model including endogenous policies.Finally,this paper conducts a policy simulation of the financial crisis in 2008,and found that:If China chooses a combination of a prudent monetary policy that appropriately raises interest rates in 2008 and a moderately tight fiscal policy that reduces the fiscal deficit rate,it can avoid deflation in 2009.Secondly,in view of the fact that the IS-LM model only takes a macroscopic perspective and does not consider the microeconomic foundation,in order to avoid the criticism of Lucas,the article studies the policy coordination effect based on the macroeconomic model with microeconomic foundation—the DSGE model.In addition,in view of the current situation of"unbalanced group development" and the fact that fiscal policy is more general in China,this paper constructs the new Keynes DSGE model to consider household income heterogeneity and refine fiscal policy tools to better fit China's reality andhe status quo of economic development.Firstly,it analyzes the economic mechanism of the fiscal policy of "tax reduction and fee reduction" in the benchmark model,and examines the dynamic effects of exogenous fiscal policy shocks on household consumption,employment,wage levels and income redistribution.Further,this paper assumes the endogenous response of the fiscal policy tool and the monetary policy tool to interact with each other,in order to reflect the linkage characteristics of monetary policy and fiscal policy,and to examine the changes in the respective policy effects under the coordination mechanism.The study finds that the tax cuts of consumption tax,labor tax and capital tax as means of fiscal revenue have a positive effect on economic growth in the short term,but the impact on the consumption structure,investment decisions and employment intentions of heterogeneous households is in the direction,and the degree is different.As a means of fiscal expenditure,the increase in government consumption expenditure,investment expenditure and transfer expenditure also has the effect of stimulating economic growth and increasing employment rate in the short term.In addition,under the "double easing"coordination mechanism,the policy effects of investment spending policies and monetary policies have been significantly improved,and the effects of tax policies have not changed significantly.On the whole,the coordination mechanism plays the role of "policy amplifier",which improves the effectiveness and timeliness of the policy and enables the policy to achieve the desired goal more quickly.Third,in order to reflect the interaction between the monetary department and the financial sector,identify the coordination mechanism of China's monetary policy and fiscal policy,fit the policy effect under the coordination mechanism and analyze the social welfare losses,understanding the policy choices and connotations of monetary and fiscal policy in different economic environments.Under the goal of minimizing the loss of social welfare,this paper introduces the game behavior into the DSGE analysis framework,and describes the coordination mechanism of cooperation and non-cooperation through the different game forms between the monetary department and the financial department,and then obtains the corresponding policy rules and identifies the corresponding policy coordination mechanism of China's economic development reality,and based on the results of simulation analysis,proposes the optimal policy choices and policy combinations.Firstly,the DSGE model of the two-sector game is constructed by considering the Nash non-cooperative game and the cartel cooperative game behavior,and the policy rules of the monetary department and the financial department under the two coordination mechanisms are respectively obtained.Further,the model parameters were modified and calibrated in China,and the macroeconomic fluctuations of monetary policy and fiscal policy shocks under two different policy coordination mechanisms(non-cooperative games and cooperative games)were simulated.Furthermore,this paper has revised and calibrated the model parameters of China,and simulated the macroeconomic fluctuations of monetary policy and fiscal policy impact under two different policy coordination mechanisms(non-cooperative game and cooperative game).Finally,through impulse response analysis,comparison of steady-state results and variance differences,it is found that the policy coordination mechanism of cooperative games is in line with the facts of China's economic development;a good policy coordination mechanism can ensure the effectiveness and sustainability of policies,and help improve the credibility of decision-making departments.At the same time,the cooperation mechanism can effectively avoid the "debt-deflation" and liquidity trap risks;and,compared with the Nash cooperative game,the cooperation mechanism is an effective Pareto improvement,which can significantly improve the overall welfare level of the economy.