Introducing Investment Factors Into The Barro Grossman Model And Its Application In China

There has been a remarkable characteristic of non-equilibrium inChina’s macro-economy, which is consistent with the assumptions andresearch logic of non-Walrasian equilibrium theory of western economictheories. The domestic scholars use the non-Walrasian equilibrium theoryon China’s macro-economy making a lot of research deeply, but thesestudies are mainly focused on the traditional planned economy or dualeconomy period, analysis of others into the mathematical derivation ofcomplicated profound and difficult to simple and applied to practicalproblems. Today, although China has established a relatively perfectsystem of socialist market economy, but still retains a powerful state-owned economy and effective macro-control ability, this results that a lotof western economic theory can not be directly applicable to our countryin use.This article is based on the factors of Chinese investment. The Barro-Grossman macro general non equilibrium model is the main researchobject, using the idea of constructing, refer to the research methods. In thearticle the Barro Grossman model is extended and modified necessarily.The single market is subdivided into consumer goods market and capitalmarket. Government purchase is subdivided into government consumptionand government investment. This makes the model more close to the actualcondition of China’s economic operation. The new model can be used todescribe our some economic phenomena, to explain some problems in oureconomy. And we can run a simple analysis of the policy to our country’smacro-economy. Finally, a discussion and expectation is made for the newmodel’s development prospects.