Numerical Analysis Of Financial Industry By CGE Model In China

Built and researched A medium-sized static CGE model of Chinesemacroeconomy. In this framework，analysed interaction and fiscal policies betweenthe financial industry sector and other sectors of China. Applied the empirical analysisand quantitative analysis methods, constructed numerical model and used relatedsoftware to debug and solve the model and get the research results.The results show that under the most economically optimized situation, theoverall macroeconomic price system is stable, tax rate of the financial industry ismoderate among all sectors. The sources of income and expenditure from financialsector whereabouts are divided. Source of income from the tertiary industries andservice-oriented industries increases relatively large;while that of the raw materialsprocessing and real estate industries has declined, the decline in the constructionindustry is even as high as50%. Compared with income, the financial sector’sexpenditures to all industries are increased with an increase rate of about11.7%. Inorder to further optimize China’s macroeconomic and industrial layout, the focusshould be to enhance the tertiary and service-oriented industries.The policy simulation part shows two cases,when increases exogenous financialsector production tax rate by10%and reduces it by10%: First, the financial sectorhas a certain degree of ability to transfer cost. Second, when increase the productiontax rate by10%, the financial sector expenditure declines, by a rate of-0.266%;sources of revenue increase and decrease differently, and optimal target of theshould-have-grown industries declines. Conversely, expenses grow with a rate of0.296%; sources of revenue increase and decrease differently. Raising taxes showsinhibitory effects on consumption and macroeconomic obviously, tax cut’s effect isopposite and its stimulation is more obvious on consumption and macroeconomicthan tax increase.Thus production tax cut is more effective on the adjustment ofindustrial structure, optimization of the development of the financial sector andmacroeconomy. Therefore government can take the industry rate decrease policy ofthe financial industry, in order to optimize the macro-economic structure and improvethe overall level of utility.While there is also the policy space of tax rate increase formacroeconomy adjustment.