Empirical Analysis Of The Effects Of Macroeconomic Policies

The China's macroeconomic movements keep a steady and relatively fast pace in recent years. The fiscal policy and monetary policy of China's government play an important role in alleviating the fluctuation of economic cycle, macroeconomic management has achieved expected results. 2006 is the first year of China's eleventh five years plan, as well as the first year of new round macroeconomic management, the uncertain factors of world economic situation and the economic problems of our country challenge the policy of China's government, whom have to strengthen and improve macroeconomic management method.This paper according to the given features of the transition period, and on the basis of new Keynesian and other economic theories establishes a miniature of quarterly simultaneous equation system, simulates the effects of the sound monetary policy, sound fiscal policy and exchange rate policy to the macro economy separately, finally, given the policy advices by analyzing the stimulant result. This paper consists of five chapters, the main contents of which are introduced as below.First, the paper introduces the developing of the macroeconomic policies, and the macroeconomic policies that were carried out in recent years. Then, introduces the situation that home and abroad make use of simultaneous equation system to analyze the macro economy.The second part is the theory of the econometric model on which the positive analysis is based. The quarterly simultaneous equation system includes traditional structural equations, error correction model and seasonal adjustment method.The paper sets up the model according to the theory of Hendery: from general to special. When setting up a model, we first builds up a general model which includes all possible variables, then eliminate the unremarkable variables step by step. At last we have set up the model with the simplest variables and parameters, and test the co-integration of the model. There are some novel points in this quarterly simultaneous equation system: the first one is the model considerate the co-integration of the equations, the second one is ECM gives expression to the long-run equilibrium relationship and the short-run fluctuating relationship among the variables so that it can exactly reflect the state of economic and improve the accuracy of forecasting and policy evaluation. Third, for the seasonal factor in quarterly data, we not use usually method such as X11 or X12 but use the dummy variables to deal with the seasonal problem, since this method can create the convenience for the model maintenance and update. Forth, we use the systematic three stages least square method to estimate the simultaneous equation model, considered the covariance impact among the residuals of every equation.The third part of the paper introduces some core equations and the structure of the quarterly macroeconomic model. We use the new data which is further transacted after the statistic caliber has been adjusted. Gross domestic product quarterly data is computed by the annual data which is back adjusted by State Statistic Bureau. Fixed-asset investment data is adjusted by the ratio which is the proportion that old statistic caliber data and new statistic caliber data in the same year. For others variables which statistic caliber has been adjusted in the model, we added the dummy variable to solve this problem. On the basis of the other macroeconomic models, we set up a demand-orient model, which combines the Keynesian economic theory with the distinguishing feature in the course of reforming and open-outside policy. The model inherits the "IS-LM- Philips curve" theory. Combine the Philips curve that has been added anticipation to set up the China's AS curve, so this equation effectively connected gross demand and gross supply.The fourth part introduces the positive analysis of the macroeconomic policies simulations, including the different results of the monetary policy, exchange rate fluctuation and the financial policy in detail. Monetary policy Simulation mostly by adjusting different loan interest rate and save interest rate, exchange rate fluctuation mostly via simulating the different scene of exchange rate, fiscal policy simulation mostly by adjusting different extension of fiscal expenditure. From the simulative result we conclude that: first, upwards adjust interest rate can restrain fixed-asset investment effectively and disadvantage macro economy very little; second, exchange appreciation bit by bit better than abruptly great change; third, fiscal policy reform should carry on stage by stage, sound fiscal policy adapt to our country's macro economy development.In the last chapter, according to the above conclusions we put forwards policy advices, and sum up characteristic of the model and some aspects that needed further improve.