China's Exchange Rate System And Macroeconomic Policy

Main content:The 1st chapter introduces what is Mundell-Flemming model(M-F model). In the 1st part, we will know that Mundell and Flemming deduced the M-F model by expanding the IS-LM model to the open economic condition, and studied the relationship of exchange rate system and micro-economic policies. The 2nd part points out how we can use M-F model to analyze Chinese economic reality since the hypothesis is not fit. We can conclude that in China, IS curve is very sharp and its limited scope, LM curve is not so steep, and BP curve is sharp and sticky.The 2nd chapter describes the monetary policy and public financial policy within the fixed exchange system in China. With the hypothesis about Chinese economic reality, we can discuss the validity of our country's economic policy and the problems of their coordination. The 1st part analyzes the form and shape of the monetary policy in China and discusses it in 3 periods. It includes: 1993-1996, controlling the inflation, 1996-1999, expanding the demand, 1999-2003, enlarging the investment. Then it points out the problems of the monetary policy in China. In the 2nd part, we discuss the coordination of our country's monetary policy and public financial policy. The first problem is the factors of public financial policy. The second is we cannot use the public financial policy continuously, and if that, its validity will be affected. Why the public financial policy is always efficient is that our government's deficit. In the last part, it lists the problems of the coordination, and points out that our country's exchange rate system has become the blocks of the economic development.The 3rd chapter discusses the limitation from exchange rate system, and the necessity of its reform, with the M-F model. In the 1st part, we will know that the economy tends to fluctuate within fixed exchange system using the examples of Northwestern financial crisis. The 2nd part...