The Empirical Study Of Fiscal Policy Effect On Price In China

To maintain price stability is one of the four major goals of the national macro-control, how to avoid the decision problem is closely related to sharp fluctuations in prices and the price level. The quantity theory of money has gradually lost the applicability of the environment, this dissertation from the perspective of the bond issuance effect of China’s fiscal policy on the price fluctuation, specific analysis research from two aspects of conduction path and empirical test.First of all, from the theoretical we summarize and analyze the conduction path on the issuance of treasury bonds is likely to affect the price. As one of the important means for a country authorities to implement fiscal policy, the issuance of treasury bonds not only affect by the economic situation at that time but also reflect the government’s efforts to the economic regulation, the public will form on the future economic situation when receiving government regulation information, and then affecting their inflation expectations; diversifying its subscription subject leads to changes in the amount of money in circulation economy activities in different directions and different degree, and then effects of price fluctuation; government used financial capital investment and consumption by the issuance of treasury bonds change the private investment and consumption demand, change of social demand is an important way to lead to price changes. Therefore the conduction path may include:public expectations, the amount of money in circulation and social demand.Secondly, whether the issuance of treasury bonds and tax collection having the same effect on resident consumption (Ricardo equivalent) is directly related to the issuance of treasury bonds can interfere with price fluctuation. Therefore, we use the state space model to test whether the Ricardo equivalence theorem set up in Chinese. The empirical results show that 1981～2013 Ricardo equivalence does not hold, consumer subject to positive effect by debt issued, but the year of 1981～1996 Treasury pulling effect is small, Treasury forward pulling effect is very strong among 1997～2007 years, the effects of government debt economic began into full play, and effects of Treasury tends to saturation among 2008～2013, positive effect of government debt began to decline but still higher than the level before 1996. Overall, non-Ricardo equivalence exists on China during the all sample interval. The issuance of treasury bonds has the possibility to influence prices.Finally, this paper uses MSVAR model to text influence degree of price fluctuation in our country by issuing bonds during the entire sample interval for zoning inspection. The empirical results show that, prior to 1997 the conduction channel which treasury bonds impact on prices was not smooth due to our debt issuance and trading markets were not perfect, so the bonds issued before 1997 had no significant effect on prices. After the 1997 bonds OTC market gradually established and improved, plus the government implemented to stimulate economic development in the two expansionary fiscal policies making full economic effect of government bonds, but also resulted in significant price increases.Therefore, we should pay full attention to the role of fiscal policy in China to achieve macroeconomic objectives of price stability, from the perspective of issuing bonds, we should pay attention to guiding public psychological expectations, optimizing the structure of debt issuance, maintaining an appropriate treasury bonds and so on.