Based On VAR Model Of Non-keynesian Fiscal Policy In China And Asymmetric Effects Test:1994-2010

The market economy is not always able to maintain the balance of the total supplyand common needs, so the government needs to regulate the economy through fiscalpolicy, as well as other policy tools to its stable development in order to reduce socialwelfare loss due to fluctuations in the economy. On China in particular, fiscal policy asan important means of macroeconomic control, economic development and stability hasto key it is necessary to make its output effect reasonable and more in-depth study.Traditional Keynesian theory suggests that the effect of fiscal policy is a direct andobvious: the Depression, expansionary fiscal policy to stimulate aggregate demand,aggregate demand economic boom contractionary fiscal policy tightening. The key isthat the Keynesian multiplier. Traditional Keynesian theory is that the multiplier isnever less than zero, and the newer empirical study found Keynesian multiplier may benegative, therefore, the economics profession began the study of non-Keynesian effectsof fiscal policy. In addition, fiscal policy may have asymmetric effect, which means thatthe economic boom and recession both cases, the impact of expansionary fiscal policyon output may be different, same contractionary fiscal policy in both cases the outputsmay also be different.Firstly, the use of the HP filter to estimate the potential output, and then use theappropriate estimation method to decompose the structural budget balance and thecyclical budget balance, and then based on the decomposition of the structural budgetbalance, the VAR model study of the non-bindingin the non-Keynesian effects ofdiscretionary fiscal policy in the1994-2010period and the asymmetric effect.The empirical study results show that:(1) China’s fiscal policy in the1994-2010period with a weak non-Keynesian effects during the sustained rapid economic growthmainly from the continuation of the output itself and fluctuations.(2) Our obviousasymmetry in fiscal policy in the1994-2010period, the impact of the expansionaryfiscal policy on output Keynesian effect, the impact of the tightening of fiscal policy onoutput has non-Keynesian effect, and both production there are also differences out theimpact has obviously asymmetric, mainly in the different degrees of impact andduration.(3) Different policy effects of expansionary fiscal policy in the case of bothpositive and negative output gap has a significant asymmetry positive output gap, theeffect of expansionary fiscal policy has significantly expand output, while the negativeoutput gap the case was weak non-Keynesian effects.(4) Contractionary fiscal policy also has asymmetric effect is both positive output gap is still negative output gap,tightening fiscal policy has the effect of the contraction of the economy.The results of this study have important practical value, mainly in:(1) Non-Keynesianeffects of fiscal policy has been presented, the practice of fiscal policy in the futureshould pay more attention to the possibility of non-Keynesian effects, avoid misjudgedthe effects of fiscal policy and the economic situation to change in the opposite directionwith the expected.(2) Asymmetric effect of the impact of fiscal policy on output, whichhelps to improve the practical effect of fiscal policy in China, and has a strong referencevalue of co-ordination between the macro-control policy, such as the tightening of fiscalpolicy has obvious non-Keynesian effects, in this case, it should be reasonable withfiscal policy and monetary policy, to avoid non-Keynesian effects of the tightening offiscal policy to cause economic overheating.(3) Asymmetry of certain non-Keynesianeffects in the negative output gap, the practice of fiscal policy should be used cautiouslyexpansionary fiscal policy, or other means of regulation which is another expansionaryfiscal policy expansionary fiscal policy in negative output.(4) The non-symmetry of thetight fiscal policy also requires careful implementation of tight fiscal policy.