Research On The Macroeconomic Effects Of Different Fiscal And Monetary Policy Coordination Modes

As two important means of macroeconomic regulation and control,monetary and fiscal policies play an important role in the development of market economy.However,whether the two policies can achieve the desired effect,not only depends on their independly correctly making and implement,but also relies on their effective coordination,which plays an important role in economic development,both in theoretically and practically.With the development of dynamic stochastic general equilibrium theory,DSGE model has become the main tool of macroeconomic research at present,and the New Keynesian Economics has become greatly used for the research on real economy,due to the fact that it's closer to reality,comparied with RBC.Based on the above two reasons,this paper establishes the basic DSGE model considering the household sector,manufacturer department,central bank and financial department,and investigates the different macroeconomic effects of four different coordination model of monetary and fiscal policy,based on the New Keynesian theory,with the hypothesis of sticky price and monopolistic competition,in the closed economy set.Specifically,this article derives the IS function and Phillips curve respectively by maximazing the discounted intertemporal utility of family and the profit of firm.In this respect,the IS function represents the aggregate demand,and the Phillips curve indicates the aggregate supply.Moreover,this paper gives the dynamic evolution equation of government debt,so the above three equations constitute the basic economic model.Here we assume that there are four coordination model of monetary and fiscal policy,namely completely independent formulation,completely unified formulation,monetary policy leadership and fiscal policy leadership.And then we examine optimal monetary policy and fiscal policy behavior equation under different models.In order to examine which one of the models can be better in accordance with our country practice,we use the economic data from 2008 Q1 to 2016 Q4 to compare the simulated data and the real one,whose result shows that the fiscal policy leadership can best accord with this period.For the purpose of comparing the macroeconomic effect of four different coordination modes,this paper carries on the corresponding social welfare analysis,and we get the following three main conclusions:firstly,fiscal policy leadership resulting in least loss of social welfare;secondly,completely independent policy making leading to most loss of social welfare maximum;thirdly,the mode that one of the policy making department takes the lead is superior to the completely unified model,and the above conclusion are robust.Meanwhile,we analysis the influence of different kind of shocks to economic variables by the means of impulse response function(IRF).In this paper,we introduce the fiscal policy factors to the IS equation,and set the dynamical evolution equation of government debt,to reflect the combined action of monetary policy and fiscal policy,rather than only one side.on the other hand,based on the basic DSGE model,we derive the optimal monetary policy and fiscal policy behavior equation,which can provide reference for China's macroeconomic policy making.