Empirical Analysis Of The Open System, Stable Economic Growth Conditions

Though the theory of Policy Coordination may be the most persuasive one among the theories of Balance of payments and Macroeconomic Adjustment, it is not perfect. The theory of Policy Coordination merely shows a pathway to solve the unbalance of international payments within its hypothesis premises and theoretical framework. Nevertheless the theory can neither put forward the concrete conditions of implementing balance of payments, nor decide the degree of the coordination between different policies.In the book of The Theories of International Finance and the Techniques of Quantitative Analysis, Professor Pan Guoling proposes a new method of quantitative analysis to solve unbalance of international payments. The article deduces two dynamic equations of Net Foreign Assets and Current Account by employing the Economics and Mathematics methods, revealing the relation between the two Accounts and the other economic parameters. These parameters include the growth rate of economic, the ratio of gross savings to product, the ratio of product to assets, the ratio of net foreign assets to product, the exchange rate, the ratio of current account to product at original conditions, the ratio of net foreign assets to product at original conditions and the ratio of the government fiscal deficit to product. The article concludes the critical conditions to keep the balance of the Current Account and the Capital Account as well as the steady growth conditions to realize the reversal of the two Accounts.The thesis places the emphasis on the demonstration of the New Theory. First, the author analyses the characteristics of the new theory, and points out its major differences from the theory of Policy Coordination. Then the article puts forward the method of demonstration and concretely verifies the economic status in U.S.In the past forty years, US assumed a typical macroeconomic pattern. From the beginning of 1960's to the end of 1970's, the balance of payments of US keeps surplus while from the early 1980's, the balance of payments of US changed into deficit gradually. The article divided the US economy into two phases.Through computing some economic parameters, the article separately demonstrate whether the real reverse conditions is in accordance with the proposals of the article111 . Based on the demonstration, the article analyses theapplicability of the new theory. Through analyzing the conclusions of the article'11 , the article derives policy selections to realize the reversal of the two accounts under different preliminary conditions. The article analyses the change trend of the parameters after the Second World War and demonstrates the reverse conditions for the two accounts. Finally, the article discusses the conditions and possibility of realizing the reverse the two accounts in future in U.S., based on the characteristics of Current Account and Net Foreign Assets.The complex demonstration and research of this thesis boosts up the persuasiveness and practicability of the new theory of Balance of Payments. Meanwhile, some defects and insufficiencies were found, which will inspire us to further research.Xia Weipu(INTERNATIOANL TRADE) Directed by Professor Pan Guoling...