Cost-benefit Analysis Of Our Fiscal Policy And Monetary Policy

In the process of economical operation,the fiscal policy and monetary policy will become main tools of the government's macroeconomic control day by day. In the implementary process of the fiscal policy and monetary policy, it takes to pay certain costs for the usage of each kind of tool and will also bring corresponding proceeds. How to work out the problem of cost and proceeds to our country's macroeconomic control has very importance of meaning.This text has been analyzed on the basis of macro-economics combining the actual circumstance of our fiscal policy and monetary policy in recent years. Firstly, it explains the meaning of the fiscal policy and monetary policy. The fiscal policy is that the government have some choices in government expenditure, taxation ,the level of borrowing and the level of government revenue and expenditure in promoting the improvement of employment levels, reducing fluctuations in economy and preventing inflation, stabling steady growth. State finance consists of government income and expenditure, government expenditure consists of government purchase and transfer payments, government income consists of taxation, public debt and other income. The monetary policy is one of the most powerful tools in the government's macroeconomic control. It is that the Central Bank selects certain monetary policy tools to adjust money supply and interest rates, and influent the operation of the national economy through changing supply of currency and interest rate to achieving the established economic goals, in accordance with the current economic and financial situation and the future trend analysis for a period of time, the monetary policy tools consists of the rediscount rate, statutory reserve rate, open market operations.Secondly, the text analysizes the cost-benefit and the costs and proceeds on the fiscal policy. Cost-benefit analysis can apply costs and expenses analytical method to the government's programmed decision-making and looks for the decision to how to minimize the costs of access to the largest gains. In the area of government's macroeconomic control, cost-benefit analysis both in theory and in practice have developed rapidly to the important basis on comparing the implementation's effect in a country's various policies and measures. In the economic society, it all takes certain costs and expenses to any social behavior, this kind of costs and expenses is no longer a pure accounting costs category than a kind of expense including other noneconomic social costs and extensive contents. Therefore, the implementary cost level and the size of proceeds on the fiscal policy and monetary policy have greater influence to our country's economical operation and even social operation. The cost-benefit and the costs and proceeds on the fiscal policy can be expounded from both sides of the expansionary fiscal policy and the tight fiscal policy. Proceeds and costs on the fiscal policy have been analyzed through the IS-LM curve under the condition of product market and the monetary market's equilibrium and the Keynesian theory of multiplier effect and in the meantime, have been analyzed combining concrete operational tools, e.g. public debt, expenditure,taxation. In the last years,our government expenditure spur economic growth obviously. The government consume expenditure, government investment expenditure and public debt the implement of the taxation also spur economic growth obviously. The operational tools bring certain of expenses, also pay in the meantime certain of cost, e.g. government expenditure's crowding-out effect, the public debt's interest costs.Again, the text analysize the costs and proceeds on the monetary policy. It has also been analyzed through the IS-LM curve. In times of economic recession, the implement of the expansionary monetary policy can stimulate demand and prevent deflation. In 1997~2003,Central Bank practice steady (expansionary) in order to achieve the objectives of full employment and economic growth, the monetary policy kept the national economy the situation of high growth, low inflation. See from the policy proceeds, it served its purpose. In times of economic overheating, the implement of tight monetary policy suppressed demand and stabilized prices. In 2003~2008, the policy direction is changed from the steady monetary policy to the tight monetary policy. Economy came out deflation from 2003 in China, and got into new high-speed growth period and then got heater and heater. The Central Bank adopted a series of tight monetary policy , implement"double tight"macroeconomic control on the side of money supply and money demand and tightening efforts of the monetary policy also strengthen day by day along with getting heater in economy. The costs and proceeds of the our monetary policy have been analysized through the three kinds of tools of the monetary policy,was also the costs and proceeds of rediscount rate, reserve requirements on deposit and open market operation. The implement of three kinds of policies could bring proceeds , but also paid costs in the meantime, e.g. interest on reserve fund, the interest cost of bill of the Central Bank. Finally, the text put forward the countermeasures of the fiscal policy and monetary policy in reducing costs and improving proceeds. At the fiscal policy, we should carry on supporting reforms, change the way of economic growth by the investment of public debt, appropriatly decrease fiscal deficit and the scale of long-term construction public debt , aggressivly adjust the structure of public fiscal expenditure;the public debt funds is used to competitive industries; and optimize the tax structure;bring structural adjustment of tax into play and strengthen tax collection and management. At the monetary policy, we should promote market-oriented interest rate reform, actively create the conditions for market-oriented interest rates, promote the perfect the market interest rate system; perfect the monetary market and the capital market; reform the exchange rate system positively; improve foreign exchange management system, and steadily promote convertibility of the capital account, and widen the channels of capital outflow, actively foster and development the foreign exchange market, reduce the monetary policy interference to the Central Bank; perfect instrument markets,and enhance the social credit awareness, and improve the basic conditions for instruments,actively expand the size of the market instruments and speed up the building of the bills legal system, improve bills operating environment.At present, in the implementation of our government fiscal and monetary policy, because of the inherent deficiencies of the system and mechanisms, it has the problem of high-cost and the expected proceeds. This need to take corresponding measures and means to constantly improve these systems and mechanisms. Thus, the implementation of the fiscal policy and monetary policy is more meaningful.