Analysis Of The Dynamic Effects Of Fiscal Policy In China

China’s economy has been grown for30years, with the increasingly complex market economy, has been offered the functions of the national macro-control more stringent test. How timely and accurate national macroeconomic regulation and control has become the focus of fiscal policy. Therefore, the paper analyses the different effects of fiscal policy which can provide the basis of macroeconomic policy formulation.In this paper, accompanied with the traditional economic theory, build the dynamic S VAR model which contains the demand factors and fiscal policy instrument to analyze the effect on the economy and aggregate demand of the main fiscal policy instruments including the turnover tax which includes the value-added tax, consumption tax and business tax, and also the individual income tax and corporate income tax, but also analyzes the current effect of the "four trillion" positive fiscal policy. The impact to output of tax policy and government spending shocks are different, tax policies with limited duration, and easily lead to severe economic shocks, which would harm the economic stability, and to the expansion of government spending as the most important fiscal policy which would also stimulate economic growth but with a longer duration. The effect of different tax policy instrument shows that the impact of our value-added tax on output and private consumption are the most obvious, but easily cause volatility in the economy, from other side also reflects the burden of value-added tax is too high and need further adjustment, the impact of the consumption tax on private consumption are more prominent, but with a long delay, last short term, failed to adjust the consumption structure achieve its supposed to be a powerful and flexible macro-control function; corporate income tax and business tax don’t agree with the theory, preferential policies of China’s enterprise income tax and the imbalances and evasion problem of the business tax has serious damage to its macro-economic functions; personal income tax on the consumption of regulation is the most rapidly, the current maximum effective, and long-term to boost private consumption and economic growth, but its share is too small, very limited its effect. The result of empirical test of positive effect of fiscal policy of China from2007to2010showed that the fiscal policy shows significant effect and effectively stimulation of the private investment, pull economic growth in a long term. Among them, the impact of the expenditure of public services on output didn’t last long, and has a certain role on private investment which shows that of the general public service needs have been met. Government spending on education and science will bring economic growth in a long-term. Government transfer payments drive the private consumption in a short term, don’t have impact on private consumption and output in a long term, indicating that the expansion of transfer payments in the short term has significant effects.