Research On Fiscal Policy To Deal With Economic Depression And International Comparison

The global financial crisis initiated by the U.S. sub-loan crisis grows in intensity and has caused serious influence on the global real economy. Because of the high dependence on foreign trade, imports and exports have become important poles to promote the economic growth. The economic depression of the developed countries led to a severe shrink of China's external demand. The exports glided by a wide margin, a large number of export-oriented enterprises collapsed, and the unemployment rate soared. The growth of the economy began to slow down. The risk that our country falls into the economic depression is strengthened day by day. Therefore, under the background of the current financial crisis, the discussion of how to use the fiscal policy to deal with the economic depression has a great practical significance. In this paper, we classified and compared the economic depressions according to their causes. On this basis, we discussed the focuses and tools of the fiscal policies dealing with different types of depressions. We took the United States and Japan as examples to compare and appraise the results of the fiscal policies which governments took to deal with the previous large-scale economic depressions. In addition, we offered fiscal policies for our country to deal with the economic depression initiated by the world financial crisis.At first, we divided economic depressions into two different types according to their causes on the basis of defining the concept of the economic depression in this paper: the real economy unbalanced type of depression and the virtual economy unbalanced type of depression, and the real economy unbalanced type of depression is divided into the total quantity type of depression and Structural type of depression according to the causes of the real economy unbalanced type of depression. Secondly, we analyzed the focuses and tools of the fiscal policies dealing with different types of depressions. Our Studies suggest that, the focus of the fiscal policies dealing with the real economy total quantity type of depression lies in stimulating the effective demand, and the tools of the fiscal policies should be expanding government's expenditure and tax cuts. To deal with the real economy structural type of depression, the focus of the fiscal policies is to adjust and optimize the economic structure, and we should take structural tax cuts as the main policy tool. To deal with the virtual economy unbalanced type of depression, the focus of the fiscal policies should be resuming and rebuilding the confidence of the market, and we should use all kinds of fiscal polices such as expanding government's expenditure, tax cuts, increasing the transfer payments to the residents, etc to stop the trend of the crisis spreading from the virtual economy to the real economy. Moreover, we took the United States and Japan as examples to compare the kinds of the previous large-scale economic depressions, and appraised the results of the fiscal policies which governments take to deal with the depressions. Finally, we judged the types of the economic depressions of our country, and offered fiscal polices for our country to deal with the economic depression initiated by the world financial crisis.