Research On The Joseph Stiglitz’s Government Intervention Under The Information Asymmetry

It has been thirty years from the reform and opening up, the rapid development making our country become the world’s second largest economy from a backward agricultural country. China’s government looked for the equilibrium relationship between the government and the market by the way of feeling stone in a river, which achieved a certain experience, also took many tortuous paths. But now our country is in the key period of economic transformation. Weather can we balance the relationship between the government and the market is a very important issues in the economic transition. Although the goal of constructing socialist market economy of our country is already determined, explore the road of socialist market economy still need theoretical guidance.From the perspective of information asymmetry, this paper systematically study the Stiglitz’s new theory of government intervention, which including market failure theory and the economic function of the government theory, and discovery contributions and shortcomings. And analyze the relation between government and market, explore the problems of government intervention. Finally comes to the conclusion that Stiglitz’s new government intervention theory can enlighten the construction of China’s market economy, and it also have practical guiding significance in balancing the relationship between government and market.I think that our country should adhere to both strong government and strong market in economic construction, so as to establish a combination of mutual cooperation relationship between the government and the market. The government not only make supplement in market failure, but also through the introduction of competition mechanism, the establishment of a perfect public service, feedback mechanism, reduce the government agencies and breaking local protectionism to prevent the emergence of government failure. Combine the Stiglitz’s new government intervention theory with China’s reality, and take the essence to service China’s market economy development. Therefore the government should strengthen the alliance between the government and private, perfect social security system, introduce competition mechanism into government agencies, improve the credibility of the government. I hope the above policy can provide theoretical basis to the transformation of China’s market economy.