Monetary policy_ fiscal policy yu

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					Monetary policy, fiscal policy yu
Fiscal policy is defined as the need to stabilize the economy through fiscal spending
and tax policies to regulate aggregate demand. Increased government spending can
stimulate aggregate demand, thereby increasing the national income, otherwise
depressed aggregate demand and reduce national income. Tax on income is a
contractile force, therefore, increase government revenue, thereby reducing aggregate
demand can inhibit the national income, whereas, the increase in nationa l income to
stimulate aggregate demand.
Narrow monetary policy: that the central bank to achieve the established economic
goals (price stability, promoting economic growth, full employment and balance of
international payments) using various tools to adjust money supply and interest rates,
thereby affecting the macro-economic policies and measures the total co.
Broad monetary policy: that governments, central banks and other relevant provisions
of all the currency and the impact of financial variables to take all the measures.
(Including the financial system, that is, the rules change, etc.)
The main differences between the two is that the latter's policy- makers
including government and other departments, they often affect the financial system in
the exogenous variables, changes in rules of the game, such as the rigid restrictions on
the scale of credit, credit direction, opening up and development of financial markets.
The former is the central bank in a stable structure in the use of discount rates, reserve
ratios, open market operations to change the interest rate and money supply targets.
China is currently implemented: two sound fiscal and monetary policies

[Abstract] fiscal policy and monetary policy are two basic macroeconomic regulation
and control policy instruments. Mainly through the implementation of the two
expansion or contraction of policies, to adjust the total supply and total demand of
social relations. They both have different emphases, but also closely linked, we should
grasp and correctly handle the relations between the two, coordinated and flexible
based on actual use of fiscal policy and monetary policy, to fully play its due role,
ensuring healthy and sustainable national economy rapidly Fazhan . State regulation
of supply and demand of social capital should be avoided as much as possible
administrative intervention, but should be mainly using economic means to guide, not
obvious when the effects of monetary policy, the fiscal policy should play to its
leading role. At the same time, maintain a certain scale of national debt, not only of
financial policies important means of control, Er Ju Wei Zhongyangyinhang Fazhan
can also conduct bond market, money market operations Tigongbiyao conditions
Gong Kai, Zeng Qiang effectiveness of monetary policy transmission mechanism.

Fiscal policy and monetary policy are two basic macroeconomic regulation and
control policy instruments. Mainly through the implementation of the two expansion
or contraction of policies, to adjust the total supply and total demand of social
relations. They both have different emphases, are also closely linked to accurately and
correctly handle the relationship between the two, according to the actual situation of
co-ordination and flexible use of fiscal policy and monetary policy in order to fully
play its due role to ensure the sustained, rapid and healthy development of national
economy .
First, financial bonds issued to banks to adjust the size of the money supply is an
important channel
In today's society, a country's monetary aggregates are defined
by their monetary unit that the purchasing power of the total amount of social
currency, including cash (or cash) and bank deposits ("deposit
money"), which, increasingly the proportion of bank deposits The larger
the cash is a very small proportion. Therefore, the so-called money supply, not only
refer to cash the running, but more is the deposit money supply. Currently running a
channel of currency are: 1, the central bank bought the note- issuing gold reserves (or
other reserve materials); 2, the central bank to buy foreign exchange reserves; 3, the
central bank to buy government bonds or to the Government (Finance) overdraft; 4,
the central bank various types of loans to bank loans, or loans held by banks to buy
treasury bonds, central bank notes, financial bonds and loans to banks through lending
to the community; 5, after the lending bank deposits, in addition to deposit a certain
proportion of deposits bank deposit or maintain a certain provision for deposits, the
loans to the community, and loans for the formation of the multiplier effect; 6, outside
the central bank to buy all kinds of bank bonds, corporate bonds and foreign exchange.
In addition, the total purchasing power of money from the whole country watching,
foreign capital inflow and outflow of domestic currency will affect the social currency
within the total (this should be a net inflow or net outflow of specific analysis).
China's current money supply the most room for adjustment channels, one
bank loan, which is a main channel of money supply; Second, various banks to buy
treasury bonds and financial costs to the community through the money invested.
Other sources put monetary room for maneuver is limited. Here, the finances of the
bank issued treasury bonds, it means that banks increase the money supply (which
will also form a financial multiplier effect of running); financial payment to the bank
issuing the bonds, it means banks to reduce money supply (increase Huobihuilong). In
other words, our budget also reflects not only the collection and payment of social
currency, reflecting the redistribution of social currency, and financial bonds issued to
banks to adjust the size is an important channel for the total money supply. This is
also the fiscal policy and monetary policy is closely related to the importance of
Second, the use of two channels, effectively regulate money supply in particular,
"the money in circulation"
In general, the total amount of social currency is expressed in purchasing power in
money amount, that is, aggregate demand, but a time to see the community there will
always be a part of the total money from the social production and circulation and
settle down, do not form current actual purchasing power. Therefore, the total amount
of social currency and can be classified as "money in
circulation" and "settling the amount of money" in
two parts. True impact of effective demand for a certain period of society, not entirely
social monetary aggregates, but mainly the money in circulation. Of course, changes
in the money in circulation and changes in monetary aggregates are closely related.
From monetary and fiscal policies on the social monetary aggregates, particularly the
regulating role of money in circulation to see, there are significant differences
between the two, can not substitute each other.
From the basic object of monetary policy bank loans ---- put money situation, the
formation of capital in loans is debt capital, are generally prescribed term of the loan,
due to debt service, interest on loans is the loan price or cost. It therefore put more of
the trading behavior of funds, can put out, and the number of actual delivery,
depending on the wishes of buyers and sellers and bank credit funds of the scale,
rather than unconditional. Among them, the bank can lower interest rates and loan
conditions to increase the loan demand, but lower interest rates to stimulate demand
for loans is limited to the role, especially in a lack of full cost efficiency awareness
and constraints of Shehui especially; Er regardless of cost, abuse regardless of the risk
is placed loans banks do not meet the principles and regulatory requirements, is
strictly controlled. The growth of bank loans Basically, the decision on the future
income of the borrower or the expected investment return and confidence. Lack of
effective demand in the face of loans, there is deflationary pressure situation, through
expansionary monetary policy to stimulate the role of money demand is often very
limited. However, strong loan demand in the community, increase the money in
circulation, is facing inflationary pressures, the bank as money providers, in the role
of money it will put far more money invested in expanding its role. In addition, banks
by raising or lowering deposit interest rates, can be adjusted to some extent the social
Cunkuan intention, and thus a certain extent on the amount and currency adjustme nts
Chendian money in circulation Bi Li, Dan also affected by social Cunkuanyixiang
many factors, in particular is also income and expenditure by the future impact of
expected changes, a simple adjustment of the deposit interest rate regulation is
From fiscal policy on monetary aggregates and the impact of money in circulation
terms, the strong will of the social savings, investment and insufficient consumer
demand, by issuing government bonds to absorb some of the social precipitation
money (including bank sedimentation funds), and by expenditure running out, can be
directly and effectively adjust the current amount of money precipitated the
quantitative ratio and the currency in circulation, and through improving the
investment climate lead private investment, improving social expenditure is expected
to reinforce their right 未来 confidence in economic growth, thereby stimulating
investment and consumption society demand. But the issue of bonds the state debt to
society is to be returned, therefore, must ensure quality and efficiency of the bond
investments, and to avoid the financial investment and generate increased private
investment "crowding out effect." The total amount of bonds
issued must be controlled within the scope of affordable finance, to avoid serious
financial crisis. At the same time, also Bixu see, financial investment is one kind of
equity investment, which Dai Biao Zhao pair of Pi Investment 企业 or 项目 title,
and thereby enjoy the right to be invested enterprises and project management,
dividends and Chuzhi of Quan Li, but does not urge Qi return of investment in power.
This means that the fiscal expansion of capital investment, when faced with
inflationary pressures, the need to control money supply, it is necessary to recover the
investment is very difficult, for some investment projects with longer, if the rush
Tingzhi follow-up investment may cause significant loss of Huan .
Monetary policy and fiscal policy under different circumstances not only in regulating
the monetary aggregates, particularly the impact of money in circulation is different
from financial investments and bank loans and the nature is completely different. To
correctly understand and accurately grasp the essence of both features and
fundamental differences, give full play to its proper functions, but could not mixed up.
Has been practiced in China, "Bo Gaidai" will state funding for
state-owned enterprises (investment) to unity by bank loans, this despite a period of
time to address the special problems played a positive role, but the impact of bringing
new far-reaching problem: a serious lack of business capital, financial burden; will
solve the funding to finance bank loans, the loans the banks have lost control of
standards and autonomy, bank teller to become the financial and Planning
Commission; bank loans instead of grants enable enterprises to get loans are not also
the reason (investment return of the problem does not exist), resulting in a serious
state-owned banks do not repay the loan business integrity. These are all worthy of
our serious lessons learned.
Should be emphasized that fiscal policy is a manifestation of national intent, although
policy- making within the delay is rather long, but, once established, its
implementation with mandatory external delay is very short. The adjustment of
monetary policy is largely dependent on deposit and lending rates, deposit reserve
ratio, bills rediscount interest rate and refinancing interest rates, indirectly, to adjust
deposit and loan interest and private interest and other bank loans, through
multi-channel transmission links can be effective, so , the external delay is relatively
long. Continue to promote sound market mechanism, the state regulation of supply
and demand of social capital should be avoided as much as possible administrative
intervention, but should be mainly using economic means to guide, in this case, when
the little effect of monetary policy, the fiscal policy should play should have the
leading role. At the same time, maintain a certain scale of national debt, not only is
fiscal policy control 重要 means, and can be Wei Zhongyangyinhang Fazhan bond
market program has been monetary Gongkai 市场 operation provides the necessary
conditions, to increase monetary 政策 conduction is effective. Shows that monetary
and fiscal policies must be closely and support each other, not each other instead of
each other shirk.
Third, the monetary aggregate and control the money in circulation and standard to
Monetary aggregates or the regulation of aggregate demand is a very complicated
matter, to accurately grasp the direction and scale adjustment is difficult, but is the
key issue that must be clear.
We know that regulate monetary aggregates and the main purpose of the money in
circulation is to maintain economic stability and moderate growth, keeping prices
relatively stable, thus ensuring maximum employment, social stability and
development of foreign trade. Accordingly, we can be sure, monetary aggregates and
to determine the growth rate of money in circulation depends on the national economy
(gross domestic product GDP generally indicated) growth target and the consumer
price index changes in goal. How much economic growth to maintain or floating
range of the consumer price index fluctuations in control in much of the range, as an
important national economic plan needs to be looked at and report to National
People's Congress approved targets. These two indicators is confirmed, you
can determine the money supply, according to the control objectives.
As the repayment of money supply or the impact on GDP has lag, so the money
supply target growth rate is also affected by money supply growth rate and GDP
growth rate correlation function (referred to as "relations
function") of. Determine the exact function of this relationship, an accurate
grasp of the money supply control goals. In order to maintain the continuity of
monetary policy, money in circulation to avoid the ups and downs,
"relations function," in accordance with the previous three years
(or appropriate time) the money supply (M2 approximate to that), and the money in
circulation (approximately expressed by M1) The growth rate of GDP growth in the
same period the average ratio of M2 and M1 were confirmed to the relationship
between the function. On this basis, then targets the major issues found during the
potential impact as "adjustments" taken into account, you can
determine the target growth rate of M2 and M1. The formula is: M2 target growth rate
= GDP growth rate × M2 relations function target ± target rate of change in the price
adjustment for M1 ± target growth rate = GDP growth rate × M1 relations function
target price target rate of change ± ± adjustments in the actual implementation , if the
actual growth rate of M2 and M1 growth rate of occurrence of large deviation with the
target (such as a difference of 3 percentage points), GDP price index, or the actual rate
of change in large deviation occurs with the target (such as below the minimum target
value or high The maximum target value at more than 0.5 percentage points), the
reverse should be properly adjusted. Thus, the regulation of money growth direction
and goals were clearer.
Determined the direction and regulation of money growth target, we must adjust and
coordinate fiscal and monetary policies to ensure monetary growth control goals.
In short, fiscal policy and monetary policy as a national macroeconomic regulation
and control of the two basic policy instruments, both regulatory priorities and
different means of regulation have different impact and scope, but also in close
contact, mutual influence, we must correctly understand and accurately handle
relationship between the two in order to exert their expected positive effects.