A Study Of The Heterogeneous Effects Of Nonlinear Taylor Rules On Urban Employment In China

As China’s economy enters a new normal,the economy has shifted from the stage of high speed growth to the stage of high quality development,and the organic combination of high quality economic development and policies of "employment preservation" and "employment stabilization" has become an important means to expand the employment space and employment quality in China.However,with the changes in the domestic and international economic environment,the topping out of labor force growth and structural unemployment,the situation of employment preservation in China has become more and more complicated,and how to use monetary policy and other means to stabilize employment has become one of the most important livelihood issues.Interest rate policy,as an important macro-control instrument,has a significant impact on enterprises,the main body of absorbing new employment,and has the non-linear characteristic of changing with the stage of economic growth.At the same time,the impact of interest rate policy on employment of enterprises of different ownership also shows obvious heterogeneity,and the decisions made by enterprises in response to changes in interest rate policy may differ due to different ownership of enterprises.Therefore,studying the impact of the nonlinear Taylor rule on employment in China’s urban areas has important policy implications for China’s current deployment of the "six stability" and "six protection" measures and the implementation of the employment priority strategy.This paper uses the literature analysis method to sort out the corresponding theoretical mechanism and the progress of existing research,which provides theoretical support and entry point for this paper.On this basis,the threshold regression model,OLS model and GMM model are used to estimate and analyze the stability of the nonlinear Taylor rule from the first quarter of 1996 to the fourth quarter of 2018.Finally,the VAR model is applied to measure the heterogeneous effects of the nonlinear Taylor rule on total urban employment,employment in state-owned enterprises and employment in private enterprises through impulse response functions.The corresponding policy recommendations are proposed based on the estimation results of the nonlinear Taylor rule and the impulse response analysis.Through theoretical and empirical analyses,this paper draws the following conclusions:China’s economic growth is characterized by an obvious regime shift,and interest rate policy is also nonlinear with the regime shift;overall,the effect of interest rate policy is better in the contractionary regime than in the expansionary regime;in the contractionary regime,an increase in interest rates causes an increase in the unemployment rate,and this negative effect lasts longer;while in the expansionary regime,the effect of interest rate changes on employment in different types of enterprises is different.When the interest rate is raised,the total new urban employment and private employment will drop slightly and return to the level before the interest rate shock in the short term;when the employment of state-owned enterprises is shocked by the interest rate,it will rise for a short time and then gradually fall.Based on the findings of the study,and taking into account the actual economic situation in China,this paper puts forward policy recommendations to ensure moderate economic growth rate,appropriate relaxation of interest rate policy,encourage state-owned enterprises to stabilize employment,and promote private enterprises to expand employment.