Theoretical And Empirical Analysis On The Crowding-out Effect Of China's Public Debt

In 1998, the financial crisis broke out in Southeast Asia, and the domestic need continuously decreased. With the changing of the domestic and international economic situations, the government decided to put the positive public finance policy into practice in order to stimulate the growth of the economy. From 1998 to 2007, Chinese government issued￥739.3 billion public constructive debt, with the purpose of controlling the economy, instead of making up the finance deficit. The public debt policy became an important tool that connected the public finance policy with the monetary policy. With the growth of economy, whether the public debt reduced the private investment or not and how to treat the crowding-out effect of public debt and how to adjust the policy of public debt are becoming important topics that we must face. The analysis on the crowding-out effect of public debt is important, which helps to perfect the market system and raise the efficiency of the national economy. The researching works on the aspects mentioned above have very important academic and realistic meanings.At first, this thesis introduces the writing background, the meaning, the researching method and the innovative points. Then on the basic of introducing the western classic fundamental theories, the author analyzes and evaluates the works of domestic and international scholars in this field. There are two major views in this article: on the one hand, the author carries on the theoretical analysis on the crowding-out effect of the public debt. The theoretical analysis includes two kinds: the institutional crowding-out effect and the economic crowding-out effect. On the other hand, this article carries on the empirical analysis on the crowding-out effect of china's public debt. According to the empirical analysis, this article comes to conclusion that two kinds of crowding-out effect for the institutional public debt exist in our country. Firstly, because the government investments preponderate over the scope of the public investment, even expand to the competition realm, and therefore the private investments are crowded out. So under such condition the institutional crowding-out effect appears. Secondly, because the investment from the state enterprises are too great, and what's more, the management condition of them is not satisfying, some of which even come to bankruptcy, the public debts that support the state enterprises to some extent are not made good use of, which means a waste of public resource. Under such condition, the private investments are also crowded out. This is another kind of form of the crowding-out effect of the institutional public debt. However, along with the increasing of employment and the residents' deposit, the economic crowding-out effect and the institutional crowding-out effect will appear. Finally, this article puts forward to some policy suggestions on the public debt. In a long period of time, we should adjust the investment realm of the public debt. The public debt should be withdrawn from the competition realm and then enters the public realm; The government should adjust the public debt amount, and improve its management The risk of the public debt should be regarded, thus the crowding-out effect on the private investment the public debt brings about maybe be reduced.