Fiscal Policy Options To Deal With Inflation

Before the outbreak of the international financial crisis, along with rapideconomic growth, inflation has existed. In the era of post-financial crisis, inflationintensified. The global frequency of natural disasters, the European sovereign debtcrisis, the quantitative easing monetary policy of Major economies in developedcountries, rising international commodity prices, promote the intensification of theinflation. Taking a series of monetary policy, the CPI year-on-year growth rate is stillcontinued to rise, have been rising from5.3%in April2011to6.5%in July which is arecord high.As one of the two macro-control policies, the fiscal policy should meet themonetary policy to take the initiative to make up for the inadequacies of monetarypolicy. This paper analyzes the reasons for the formation of the current inflation. Thewriter believe that the current inflation is a variety of reasons, demand pull, cost-driven reasons, money supply increased, public inflation expectations andinternational input factors. The writer conclude some experience which is worthlearning from foreign measures controlling inflation. through the analysis of theforeign inflation control measures. It includes: The stimulus fiscal policy of financialcrisis gradually withdraw and introduce a number of tight fiscal measures; In thecontrol of inflation, we should not take one thing into consideration to the neglect ofthe other, monetary tightening and tax cuts to be two-pronged; Governance inflation topay attention to inflationary reasons, to take appropriate policy; At the same time takea moderate means, pay attention to the current economic situation, avoid to take "oneknife cut" or violent means in order to control inflation.According to the cause of inflation and measures other countries take, the authorgives some tentative recommendations from financial expenditure,taxation,Monetarypolicy and fiscal policy coordination and some other respect. The author thinkexpansionary fiscal policy can be tightened moderately, but should continue to showpositive characteristics. Because in China’s current development stage of economic, weneed active fiscal policy to promote upgrading of industrial structure and change in the pattern of economic development, and investment in the people’s livelihood can not bereduced. Therefore concluded that, we can not take tight fiscal policy too tightlypreventing the evolution of "stagflation".The article has been divided into five parts. The first part introduces the researchbackground of this article, the significance of the topic, as well as some scholars viewfor inflation.The second part presents the theory of inflation and fiscal policy. This part isbasic theoretical content include two major theoretical and the correlation betweenthem.The third part analysis the performance of inflation and the cause of the inflation.Through the analysis of the causes of inflation targets and a better understanding of thecurrent inflation, laying the groundwork for fiscal policy choices.The fourth part outlines the governance of foreign inflation, include developedcountries and developing countries. Through learning other countries’ measures we canto better deal with the inflation.The last part analysis the choice of fiscal policy under the current inflation.According to the cause of inflation and measures other countries take, the author givessome tentative recommendations from financial expenditure,taxation,Monetary policyand fiscal policy coordination and some other respect.