The Forecasts Of Macroeconomic Situation Based On The Simultaneous Equations Model

The paper contains a small quarterly macroeconomic model which mainly bases on a Keynesian framework. The error correction method is used to regress the behavior equations, while the whole model uses simultaneous equation method. The model contain six main part, namely consume block, investment block, trade block, finance block, production block, government block, exchange rate block as well as price block. In these blocks, there are Seventeen behavior equations, two definition equations, Seventeen endogenous variables and ten exogenous variables. The data used in the model across from 2005Q1 to 2015Q4. The paper setup the model according to the theory of Hendery: from general to special. When setting up a model, we first builds up a general model which includes all possible variables, then eliminate the unremarkable variables step by step. At last we have set up the model with the simplest variables and parameters, and test the co-integration of the model.The paper is divided into six parts, the first part is a total introduction, expounds the current macroeconomic situation, the prior characteristics of macroscopic measurement model. The model is mainly used in the analysis of the future trend of the economic variables under the current background of declining economic growth.The second part is the literature review, respectively introduces the development history of the macroscopic simultaneous equations model from the aspects of both at home and abroad. The third part mainly talks about the theoretical model of measurement, including simultaneous equations model and co-integration theory and error correction model. The fourth part is about the model of data processing. The fifth part aims at the basic structure of the simultaneous equations model and core behavior equation, which is currently the main body of the article. The sixth part is the model’s estimation and forecast. In this part, all the seventeen endogenous variables are predicted in the model form 2016q1 to 2016q4.The result shows that the average GDP growth of China is 6.49% in 2016. Sluggish demand still come to be the crux of the economy.While monetary policies and fiscal policies face lots of constrains, the innovation is the only way to expand the potential needs, thus achieving a sustained long run growth. Under the circumstances, the current reform of supply side is proved to be an active explore of industrial upgrading and economic restructuring.