Fiscal Policy On Private Consumption Of Keynesian Effect Research

Entered in the second decade of the21st century, the trend of worldeconomic development has become increasingly unpredictable after the violentshocks of the financial crisis. Meanwhile, the trend of China’s macroeconomicsustained and rapid development has been slowdown. The original investment-driven economic growth pattern has been badly hit too. In this case, consumptiondemand as the substitute of investment demand with great motivation of forwardeconomic growth has played a more and more important role in macro-control.Moreover, private consumption demand should become the focus of government’smacro-control because of its significant position in components of consumptiondemand. It becomes the key point of maintain China’s economic growth trend thathow to promote private consumption level by macro-control policy especiallyfinancial policy. Furthermore, distinguishing clearly the variety effect of financialpolicy on private consumption also becomes the vital prerequisite to ensure theeffectiveness of macro-control. For this reason, this paper demonstrates thatChina’s financial policy has the non-keynesian effects on private consumptionbased on the method of combining the theoretical analysis and empirical analysisand makes properly analysis on the factors which may lead to non-keynesianeffects.With fully studying on the theories and literature at home and abroad offinancial policy non-Keynesian effects, proposing a two-regime Markov-switchingmodel by data analysis in China’s financial policy and private consumption from1978to2009can derive the conclusion of this paper: China’s financial policyindeed existences the non-Keynesian effects during that period. At the end of thispaper, it tries to find out the factors which may induce the non-Keynesian effectsbased on the empirical conclusion and propose the reasonable policyrecommendations for the future formulations of China’s financial policy.