The Research On The Chinese Active Fiscal Policy Effect

The active fiscal policy implemented by the Chinese government since 1998 has played an important role in overcoming the adverse effects of Asian Financial Crisis, stimulating domestic demands, and maintaining a sustained, rapid, and sound development in economy. But at the same time, it has brought some problems such as: how much contribution to Chinese economic growth has been done by the active fiscal policies on earth, whether we can forecast its effect if Chinese government continue to implement it? How we shall analyze its crowding out effect and its fiscal risk? What Chinese government shall do to fully exert the macro adjustment effect of fiscal policies?All these problems have intimate relationships with the effect of the active fiscal policy. In order to provide Chinese government with ideas on fully exert the macro adjustment effect of fiscal policies, this essay focus on research on the effect of the active fiscal policy which embraces three parts: the economic growth effect, crowding out effect and fiscal risk.Firstly, after the growth effect of the active fiscal policy on economy is examined in the IS-LM model on the basis of a generalization of the active fiscal policy, this essay predicts the perspective effect of the continuous implementation of the active fiscal policy and thinks it will not be effective.Secondly, although now, the side effect of the active fiscal policy is low, with the continuous implementation, its side effect will be increasing: the crowding out effect will getting more and more apparent and we shall pay more attention to the fiscal risk.Finally, this essay discusses some policy choices to fully exert the macro adjustment effect of fiscal policies, and thinks that we shall propel the transformation of the active fiscal policy for the benefit of fully exerting the macro adjustment effect. Furthermore, some suggestion of the transformation is provided.