Analysis Of Economic Fluctuation In China From The Perspective Of Excess Production Capacity

In recent years,China’s economy has developed into the "new normal",slowing economic growth.In order to promote economic structure transformation and promote steady economic growth,on November 10,2015,President Xi Jinping,put forward the concept of "structural reform of the supply front",and implement the structural reform of the supply front.Excess capacity,as the biggest problem to be settled urgently of the "supply side",has important influence on economic growth and volatility.And economic fluctuations can not only damage the welfare of the individual level,but also prohibit the operation and development of macro economy.Economic fluctuation analysis is helpful to grasp the economic trends from the macro aspects and has a significant influence to manage the economy and guide the economic operation.In this paper,on the basis of excess capacity and economic fluctuations and referencing a large number of relevant literatures,economic fluctuation is analyzed by using the DSGE model within the new Keynes framework,first-order conditions are derived by solving the optimization problems of various departments,and after the logarithmic linearization and the steady-state solution,dynamic equations of economic fluctuation are obtained.This paper uses GDP,retail sales of social consumer fixed asset investment,the nominal interest rate and inflation rate as observational variables,and determine the parameters in the model by using the calibration and Bayesian estimation method,and then using the impulse response analysis and variance decomposition and historical decomposition method to analyze the dynamic mechanism of the model.By which we can get the main source of economic fluctuation consider the impact of exogenous shocks changes on the economy and economic variables changes.Through the above research,the following conclusions are drawn,the comparative static analysis shows that the smooth degree of interest rate rule is higher,which shows that the interest rate adjustment has a strong inertia.In addition,from the point of view of the inflation response coefficient and the output response coefficient,the monetary policy rule is more inclined to stabilize output.In terms of the inverse estimation of the elasticity of substitution between consumption and labor in terms of the utility function,the labor force is less affected by the actual wage,which is consistent with the situation of our country’s labor supply.According to the estimation of the autoregressive coefficient and exogenous shock standard deviation of each shock equation,the duration of each impact is long,but the impact is relatively stable.The analysis of dynamic mechanism of the model is composed of impulse response function,historical decomposition and variance decomposition.Impulse response analysis shows that,in general,supply shocks(productivity shocks and labor supply shocks)have a more important influence on variables like production,consumption,inflation etc.than demand shocks(consumption shocks and government spending shocks)in the economy,interest rate shocks also have certain effects on the variables mentioned above in the economy.Historical decomposition and variance decomposition results show that the contribution rate of productivity shocks and labor supply shocks on output,consumption and investment is increased gradually,showed that the role of supply shocks in the long-term fluctuations in the variables has become increasingly prominent,and from the variance decomposition results of capital utilization rate,whether short-term or long-term,the contribution rate of supply shocks is relatively high,which also reflects the positive impact of supply shocks on capital utilization rate.