Macroeconomic Effect Of Public Capital

China has experienced distinct changes since the reform and opening-up policy.When we are enjoying the high-speed economic growth,up to 10%,some potential costs resulting from that growth are exposed.To be extent,the high-speed economic growth leads to a series of problems,regarding to environment,economic structure and sustainable development,and it has become spots of economic growth.In China,government plays a key role in promoting the economic and adjusting economic structure.Currently,during the economic transition period,government should take the responsibility to adjust economic restructure and smooth economic development.Collecting the reasonable scale of public investment and setting up reasonable policies of public investment are important to promote economic restructure and boost economic growth smoothly.This paper describes the background and significance of researching the public capital scale and structure,reviews and appraises some articles concerning computable general equilibrium theory(CGE).Then it defines scope of public capital and describes the CGE.It builds computable general equilibrium subject model based on principle theories.Finally,on the basis of data,it implements empirical analysis to the macro-economic effect,and according to its result,it puts forward suggestions to economic restructure and economic development as follow.Referring to the theoretical research,this paper mainly uses the general rationale of Walras’ general equilibrium and input-output to explain the mechanism of mutual contact and interaction of each macroeconomic market.According to the optimal behaviors of subjects of macro-economic(inhabitant,enterprise,government,overseas etc.),build a economic model which balances the supply and demand among different markets,such as product market and currency market.Thus,that lays a theoretical foundation for researching how public capital affect macro-economic variables.In empirical analysis,this paper applies CGE,analysing how could public capital influences macro-economy and growth effect of its main variables.Different amplifications of changes in public capital show the public capital contributes to macro-economic variables differently.The result of simulation describes that the expanse of scale of public capital could boost the customer spending,net export,employment,GDP and many other macro-economic variables.Meanwhile,the increaseof public capital scale improves Customer Price Index(CPI),Producer Price Index(PPI),GDP deflator and other macro-economic indicators slightly.Last but not least,this paper explains how to take advantage of public capital to promote economic growth smoothly and sustainably.To be specific,firstly,guiding by Five Development Concepts,determining the reasonable scale of public capital.Secondly,combining with Five Development Task,optimizing the structural reform of public capital.Thirdly,comprehensively deepening reform,converting public investment entities.Fourthly,Improving public capital decision-making mechanism.