A Research On The Influence Of Factor Price Distortion On China's Economic Fluctuation

As we all know,at this stage of China's macroeconomic downward pressure continues to increase.On the one hand,the global economic downturn,showing the economic characteristics of low growth and low inflation,low interest rates,unbalanced and the oscillation is aggravated,bring many unstable factors to the healthy development of China's macro economy;On the other hand,the domestic economy is prominent structural contradictions,to resolve the problem of long-term accumulation of structural imbalance in supply and demand is the arduous task of promoting economic reform in China.The development of the situation in China's economy,the traditional sense of fiscal and monetary policy has been difficult to adapt to the development of China economy into the new normal stage,the supply side structural reform as a breakthrough,to maintain the steady growth of China's macro economy.The key to promote the supply side structural reform lies in the correction of production factors market distortion.Nearly forty years of reform and opening,production factors market degree is far lagging behind the market,mainly for capital,labor,land,energy and other elements of the price distortion is still serious,which caused the regional economic gap,the income gap between residents,expand the local government debt crisis,serious deterioration of ecology,such as a series of economic problems.Bring great risks for the healthy and stable development of the economy.Based on the two factors of capital and labor,this paper discusses the influence of factor price distortion on China's macroeconomic fluctuations.After a brief description of the background and significance of the research,the paper first reviews the relevant literature,based on the connotation of factor price distortions,economic effects,measurement and economic fluctuation theory development and motivation research and other aspects of the literature review.This paper systematically analyzes the research ideas and achievements in various fields,expounds the basic points,research ideas and academic value.In the third chapter,this paper analyzes the factor price distortion and the economic fluctuation theory,focusing on the influence of factor price distortions on China's macroeconomic fluctuations,respectively from the lack of consumption,excessive investment,trade imbalances,employment effects,industrial structure and other aspects of in-depth analysis of the path of capital and labor price distortions,build clear the basic theory for the following empirical study.Then,the fourth chapter carries on the measure and analysis of the results of factor price distortions and economic fluctuation.With the provincial panel data during 1996-2015 as the research sample,select the C-D time-varying elasticity production function model,estimates of capital and labor in the macroeconomic price distortions,the results showed that regional capital,labor prices are showing a negative distortion,factor prices largely deviates from the equilibrium price.At the same time,there is a significant difference between the eastern,central and Western.In addition,this paper selects the standard deviation of the regional economic growth rate to measure the degree of economic fluctuation.The results show that there is a correlation between economic fluctuation and economic system reform,and it is found that there is no significant difference between the eastern,middle and western regions.Then,using the panel data of 28 provinces(municipalities and autonomous regions)in 1995-2015,we construct a two-way fixed effect model.At the same time,the paper introduces the cross terms of capital,labor price distortion and control variables,and empirically tests the influence of factor price distortions on economic fluctuations.Empirical results show: First,the distortion of capital and labor price has a significant impact on economic fluctuations,and the increase of factor price distortions will lead to the increase of macroeconomic volatility.Second,the government's financial input and the level of openness in the control variables have a positive impact on economic fluctuations,but with the advance of the market process,it will inhibit the generation of economic fluctuations.Third,in the eastern,central and western area,capital and labor factor price distortions have a significant impact on regional economic fluctuations,but the results are slightly different,expand the eastern and central regions of the capital price distortions will lead to macroeconomic fluctuations,while the price of western capital distortions is conducive to the stability of the region's economic growth to a certain extent.Finally,the sixth chapter summarizes the whole study and put forward policy recommendations from the deepening of interest rate and labor market reform,perfecting the government assessment mechanism and so on several aspects to change the production factor market price formation mechanism,improve the quality and efficiency of economic growth,promoting the smooth operation of the economy.