Research On The Choises Of China's Monetary Policy Rules Under Structual Fiscal Expenditure Impacts

China's growth rate shows a significant slowing down under new normal economy,thus make it necessary to stimulate economy growth by policy means.In respect of the financial expenditure structure,fiscal productive expenditure counts for a growing part of all;as for policy stance,it shows a change from monetary easing policy to fiscal easing policy.As a result of fiscal expansion,inflationary pressures begin to take shape.People's Bank of China reaches its goal of stabilizing inflation rate by manipulating monetary policy rules.Nowadays China's monetary policies are changing from McCallum rule to Taylor rule,but scholars are still debating whether the change is suitable and which rule is better.What's more,it's an unworked area that how different monetary rules act in stabilizing inflation fluctuation under shocks from government's fiscal productive expenditure and fiscal non-productive expenditure.The paper firstly organizes the literature about the influence of relevant monetary rules and their effects on price stability,fiscal expenditure and its internal structure on the inflation rate.Then the paper theoretically analyses the influential mechanism of fiscal and monetary policies on prices.Regarding the monetary policies,the dynamic inconsistency indicates “working by rules” is a better choice than “discretionary approaches”.The analysis based on IS-LM frame shows that quantitative rules have better effects on economic shocks from practical demands,while pricing rules are more advantageous in stabilizing the shocks from monetary and financial system.Regarding the fiscal policies,traditional Keynesian theory believes that the fiscal expansion influences the prices by improving total social demands;weak FTPL theory indicates that the monetary authorities would involuntarily increase the seigniorage during fiscal expansion to maintain the government's debt paying ability;while strong FTPL theory states that without the coordination with the monetary authorities,the behaviors of fiscal authorities can still directly influence the price balance.After theoretical analysis,the paper establishes a New Keynes Dynamic Stochastic General Equilibrium model(NK-DSGE)including four departments of families,manufacturers,fiscal authorities and monetary authorities to further the analysis on different response methods of inflation towards structural fiscal expenditure shocks under different monetary policies and to compare the effects of different monetary policies on price stability.In the model,fiscal expenditure is further divided into nonproductive and productive expenditure.The non-productive fiscal expenditure that can directly bring utility to families is included in the utility function of family department;the productive fiscal expenditure forms social public capital which is used by enterprises at no cost to produce intermediate goods.In order to control monetary rules,“the only variable”,the paper sets the same utility function,constraint conditions and behavior pattern for family,enterprise and manufacturer departments,while specially sets quantitative(McCallum Rule)rules,pricing(Taylor's Rule)rules and inflation target rules for monetary departments.After the parameter calibration,the dynamic simulation shows that the quantitative rules can better realize the policy target of stabilizing price fluctuation while facing the government's non-productive fiscal expenditure shock,while pricing rules have more advantages in stabilizing productive expenditure shock.In addition,effects of inflation target rules and pricing rules are similar.Considering the current macro-economic development situation,policy stance and simulation results,the paper thinks that the government should weigh and consider the fiscal expenditure structure,properly arrange productive and non-productive fiscal expenditure percentage;the monetary policy rules should gradually be transformed into “pricing rules”;the fiscal and monetary departments should further strengthen interdepartment coordination and establish communication mechanisms to guarantee China's stable and long-term economic development.