The Theory Of Endogenous Growth And Fiscal Policy

All signs show that Knowledge-economy era, a new era, is coming towards us after Agriculture-economy era and Industry-economy era. As result in continuous development and growth of our society, knowledge economy needs a fitting theory on economic growth and policy guide. The Theory of Endogenous Growth (TEG) is the fitting theory. Its core thought is that long-term economic growth is explained by human capital, technical innovation and other endogenous elements. All these endogenous elements are sensitive to government policy especial fiscal policy. This policy opinion cates to the need of developing knowledge economy and making good use of fiscal policy. So, how to choose a proper fiscal policy in the current condition of china becomes a practical and urgent problem. That's main aim at this thesis. In the light of the above thinking, this thesis has the following structure. Chapter one mainly explains theoretical origin and realistic reason for the birth of TEG. We conclude that the technical innovation is nature reason for the birth of TEG. Chapter two mainly introduces main opinions of TEG after studying each representative model and appraises this theory and analyzes its enlightenment to china. Chapter three analyzes effects of fiscal policy on long-term economic growth, which arrives at a conclusion that fiscal policy can realize long-term economic growth after disposing of technology externalities, human capital accumulation externalities, knowledge externalities, and so on. Chapter four first explores opportunities and challenges facing towards finance of our country, then gives out reform measures to resolve above problems, last analyzes several practical problems. Due to the author's limited knowledge in this field, shortcomings and errors are possible. All comments and remarks are welcome.