Financial Analysis Of The Effectiveness Of Monetary Policy And Its Application In China Study

It is highly valuable both in theory and in practice to make a systematic analysis on fiscal policy and monetary policy effects. To theoretically analyze the various factors that decide the fiscal policy and monetary policy effects will greatly benefit the orientation of the effects, which is indispensable to macro-adjustment and regulation with a more efficient use of the two policies. To set up IS-LM model properly on the basis of detailed research on those parameters that decide the fiscal policy and monetary policy effects and hence to regulate on and adjust to the economy accordingly will weigh heavily too. Fiscal policy and monetary policy effects have been expounded by a lot of authoritative economic textbooks and have been delved by many economic issues recently. The author elaborates on synthesizing and furthering these studies, tries to make these theories references for our country's economic performance, and therefore puts forward the choice s of our country's fiscal policy and monetary policy.This paper consists of four parts:Part one, importance of analysis on fiscal policy and monetary policy. It focuses on the necessity of analyzing on fiscal policy and monetary policy and their effects.Part two, theoretical basis of analysis on fiscal policy and monetary policy, is the core of this paper. It analyzes various factors which include the slope of curve IS and LM, investment interest elasticity b, expenditure multiplier , income elasticity k and interest elasticity h of currency demand, that decide the fiscal policy and monetary policy effects by economics and geometric figures. It also demonstrates two particular situations: " crowding out" and " Keynesian liquidity trap". Part three, practice of the theory of fiscal policy and monetary policy effects in our country. It sets up our own IS-LM model in the late of 20 century, discusses theeffects and presents the relationships of the effects, " crowding out" and " Keynesian liquidity trap". On the basis of the previous conclusions, part four cites some classical arguments on the coordination of fiscal policy and monetary policy and discusses selection and coordination of the two policies.