Research On The Utility Of Pro-active Fiscal Policy In China Based On M-F Model

In 2008, with the subprime mortgage crisis in the United States continues to spread, its impact on our country has become greater which displays in:the weak demand according to main trading partners, the dramatic economy shrinking in external demand, three carriages which contain consumption, investment, import and export comprehensive atrophy. In order to cope with the crisis, on November 8,2008 the standing committee of state council put forward to pursue pro-active fiscal policy right now, issue more forceful measures to expand domestic demand. However, China's economy is already stable and arising, faces the facts that the domestic began to appear inflation trends during 2010. So how to evaluate the effectiveness of pro-active fiscal policy is significant.This paper intends to choose M-F model which primarily analyze macroeconomic under open economy condition, in combination with the empirical data for so many years, trying to use the least-square method to fit the three curves in the model, then obtain a M-F model conforms to China's reality. By using the model to analyze the utility of two pro-active fiscal policies in regulating macro economic since the reform and opening in China, the paper points out that the pro-active fiscal policies play an important role in promoting China's economic growth in crisis periods, and further confirms the necessity of the implementation of pro-active fiscal policy in the near future. Finally, according to the shortcomings of the current pro-active fiscal policy, the paper comes up with some policy recommendations to perfect it. I hope it will afford several beneficial enlightenments for macro-regulation in the future.