The Dynamic Impact Of The Coordination Between Fiscal Policy And Monetary Policy On Residents' Consumption

Consumption is one of the three major driving forces of economic development.Residents' consumption & savings decisions will directly affect a country's economic growth.The combination of fiscal and monetary policy played an important role.With the development of the economy,problems arising in the course of economic operations become more complex.The coordination of fiscal policy and monetary policy is also facing severe challenges.Nevertheless,the fiscal and monetary policies of the government always overemphasize the growth of the aggregate economy,this will cause serious distortions in the economic structure and insufficiency in the residents' consumption of our country.Through the observation of Chinese macroeconomic data in recent years,this fact was found that China's household consumption rate continuously decreases.From 1978 to 2015,data from the National Bureau of statistics show that the residents' consumption rate of our country has dropped from 48.4% to 38%.At the same time,the proportion of residents' consumption in GDP accounts for more than 50% in most countries in the world.In the developed countries,the rate of consumption in developed countries is more than 55%.We found that residents' consumption of China is far from enough.Due to the sustained and healthy growth of the current consumption is difficult to rely solely on market forces.Therefore,our government should implement appropriate fiscal policies and monetary policies to stimulate the rapid growth of residents' consumption.Since 2010,China's economic growth continued to decline.Quarterly year-on-year growth fell from 11.9% in the first quarter of 2010 to 7.4% in the first quarter of 2014,in the first quarter of 2016,year-on-year growth was only 6.7%.The reason is that the economic structure of our country is irrational,economic dependence on investment is too high,residents' consumption is far from enough.As the economy enters a “new normal”,the government proposes to adjust the economic structure,and strive to solve the major structural problems that restricting the sustained economic development of the economy.In this economic context,it has great theoretical and practical significance to study how to improve the consumption of residents from the perspective of coordination between fiscal policy and monetary policy.Based on the current situation of residents' consumption in China,and comparing the majority of countries in the world,the analysis shows that show that the consumption level of Chinese residents has been increasing,but the rate of resident consumption is still at a low level.Further analyzes the current situation of residents' consumption in China,the results show that Chinese investment and consumption are seriously unbalanced,the regional disparity between urban and rural residents' consumption is large.The gap between provinces are quite different,the structure of residents' consumption need to be improved.All these indicate that improving our residents' consumption is particularly important.This paper uses dynamic optimization method to describe the behavior decision of every micro economic entity(residents,manufacturers,governments,monetary authorities,financial institutions,etc.)under uncertain environment,constructing dynamic stochastic general equilibrium model(DSGE model),and adjusts relevant parameters,obtains a stochastic model in line with China's actual macroeconomic situation.The steady growth path of the model is used to study the path of the dynamic effects of fiscal and monetary policy on residents' consumption.The empirical results indicate that the proportion of production expenditure in fiscal policy has great effect on the increase of residents' consumption.Compared with the quantitative monetary policy tools,The time lag of price based monetary policy tools is lesser,can quickly stimulate the growth of residents' consumption,and the consumption growth significantly;while the quantitative monetary policy tools can make residents' consumption more steady growth,and real output and consumption growth have some continuity.According to the different economic conditions,policy makers should consider different policies to adjust the macro economy.Under the pressure of economic downward pressure,it is better to choose price based monetary policy than quantitative monetary policy;but in the period of economic stability,quantitative monetary policy is better than price based monetary policy.Finally,for improving residents' consumption.,the paper puts forward relevant policy recommendations.