On The Coordination Of The National Debt Between The Fiscal Policy And Monetary Policy

In modern market economic system, national debt is not only the means of fiscal policy but also the channel of enforcement of monetary policy. With the initial establishment of the socialist market economic system in China, national debt plays an important role in macro-control. Therefore, it is necessary to profoundly study the effect of national debt in the enforcement of macro-policy. On the basis of previous research, this thesis studies the effects of fiscal and monetary policies of national debt, analyzes the role of national debt in macro-policies coordination, and puts forward some measures to improve the operation of national debt. It uses research methods of combining the theoretical analysis with positive analysis of experience and combining the qualitative analysis with the quantitative analysis. This thesis's content is as follows: The first chapter is on the briefly review of national debt, including the basic conception, the function, the issue, the scale, the historical development of national debt at home and abroad. Then posing the topic of thesis. The second chapter is on the discussion of the effect of the fiscal policy of national debt. Squeeze-out Effect illustrates the effect of all squeeze-out, the effect of part squeeze-out, the effect of nought squeeze-out, the effect of minus squeeze-out that expansion of national debt can reduce nongovernmental investment. The expansion of national debt can not reduce nongovernmental investment in china, which is supported by our positive analysis. The effect of income studies the influence that national debt to income both the society and the person from issue, exchange and repayment of national debt. The effect of employment transforms the relation of national debt and employment into the relation of economic improvement and employment, through Okun's law bearing out the advancement that economic improvement to employment. Our positive analysis proves that national debt avails the rationalization of income and the improvement of employment. Therefore, it is possible and necessary to continue to carry out the expanding fiscal policy. The thirdly chapter is on the discussion of the effect of the monetary policy of national debt. According to theoretical analysis, the circulation of national debt has an vital impact on monetary supply and interest rate. Our positive analysis shows that owing to the transition of financial system, Chinese debt obviously influences monetary supply, but does not influence interest rate. Therefore, China should develop bond market and promote the reform of the rate system. The fourthly chapter is on the best tool that combines fiscal policy and monetary policy. In relation to policy banks and asset management companies, national debt is the best approach. The fifthly chapter is on the role of national debt in macro-policies coordination. On the basis of theoretical analysis and positive analysis, we suggest developing to open operation to improve the effectiveness of macro-policies cooperation. There are two creative views as followings: 1. The effect of employment transforms the relation of national debt and employment into the relation of economic improvement and employment, through Okun's law bearing out the advancement that economic improvement to employment. 2. Using Ju-lei analysis to find the relative degree between national debt and macro-policies indexes, testifying the feasibility and flexibility that national debt as the coordination tool of fiscal policy and monetary policy.