On the role of monetary policy and fiscal policy-also on the coordination and cooperation between fiscal policy and monetary policy.
In 20 12, China government continued to implement a proactive fiscal policy and a prudent monetary policy. The expansion of China's fiscal expenditure is a long-term trend, and how to grasp the expansion degree is a problem worthy of attention. Fiscal policy is not isolated. The extent to which fiscal expenditure should be expanded depends on many factors, and the principle that can be grasped is to let fiscal policy play a unique role in areas where monetary policy is not effective enough.
Fiscal policy, monetary policy, fiscal expenditure expansion and coordination
Ask a Question
The expansion of China's fiscal expenditure is a long-term trend, and how to grasp the expansion degree is a problem worthy of attention. Facing the European debt crisis, the recession of the world real economy and the downward pressure of the domestic economy, the government of China continued to implement a proactive fiscal policy and a prudent monetary policy. Fiscal policy and monetary policy are the main means for the government to carry out macro-control under the condition of market economy. Facing how to grasp the expansion of fiscal expenditure. Degree? We should consider the expansion of fiscal expenditure from the perspective of overall situation and comprehensive balance and coordination of government policies and means. To what extent does fiscal expenditure expand, we must fully consider the extent to which monetary policy means are used, and we must fully understand the influence of subjective objectives and objective effects of monetary means on fiscal expenditure expansion, and grasp the degree of fiscal expenditure expansion on this basis.
Second, fiscal policy is not isolated, but coordinated with monetary policy.
Because the contraction period of China's current round of economy is superimposed with that of the world economy, and because of the financial crisis, the contraction time is prolonged and the scope is enlarged. At present, the economic problems facing China are both short-term and medium-and long-term. There are both gross and structural aspects. Faced with the complexity of practical problems and the limitations of policy transmission mechanism, it is obviously impossible to adopt only one economic policy to achieve the goal, let alone achieve good results. In this case, it is difficult for any economic policy to independently undertake the important task of promoting economic reform and economic development. At the same time, different economic policies have different objectives, implementation measures, means and tools, and their policy effects are also different, and even some contradictions may occur. In the comprehensive application of various economic policies, it is necessary to deal with these possible contradictions and coordinate the policies, so as to control various problems existing in China's economy, achieve the goal of treating both the symptoms and the root causes, and realize a virtuous circle of China's economic operation.
1. In terms of savings mobilization, there is a trade-off between fiscal policy and monetary policy.
A country's fiscal expenditure expansion and money supply expansion are inherently coordinated. The expansion of fiscal expenditure stimulates demand in two ways: one is to mobilize savings by issuing bonds; The second is to borrow money from the central bank, invest in the real economy, and increase total demand. The expansion of money supply stimulates demand, and there are two ways to expand: one is to issue additional base money, and the other is to mobilize savings and increase derivative money by lowering interest rates. Obviously, from the structural point of view, there is a trade-off relationship between fiscal policy and monetary policy. Especially in the aspect of savings mobilization, under the condition of fixed savings scale, the effects of the two can not be realized simultaneously, and the degree of realization can not be the same. Activate expansionary fiscal policy and monetary policy at the same time, both of them? Fight? Saving resources may lead to the expansion of the base money supply. In terms of issuing additional money, both can be enlarged to the same extent in theory, but the problem is that no one can bear the inflation caused by it. Therefore, the expansion of money supply will objectively restrict the expansion of fiscal expenditure. The loan growth rate reflects the amplification of the savings mobilization effect of indirect financing. At present, due to the sluggish stock market, corporate bond issuance is strictly controlled, and bank credit expansion plays a leading role, which is easy to operate. For finance, loan growth will reduce the issuance space of national debt. The nature of pursuing high profits makes institutional investors not hold too much national debt, and banks are of course willing to lend. Therefore, it can't be considered that there is no hard obstacle to issuing national debt when the fiscal expansion expenditure. Moreover, when the money supply expands, the capital market will be activated and a large amount of funds will flow into the securities market, especially the stock market. In addition, in recent years, the source structure of Chinese residents' consumption funds has changed, and consumer credit has become the source of funds for residents' major expenditures. Judging from the future trend, if house prices are lowered, buyers will use low interest rates to intervene in the housing market. At this time, the scale of mortgage loans will naturally expand. These factors are actually savings mobilization, which will definitely reduce the space for issuing treasury bonds and increase the cost of issuing treasury bonds.
Therefore, there is obviously room for monetary policy to fully start growth. The starting point of monetary policy is to directly stimulate market investment demand, and the enhancement of market participants' enthusiasm is the leading force of economic development. In the process of money supply expansion, the direct effect of lowering interest rates and relaxing loan restrictions is to limit the expansion of fiscal expenditure.
2. Fiscal policy has structural characteristics, and monetary policy has aggregate characteristics.
Both fiscal policy and monetary policy can adjust the aggregate and structure, but fiscal policy emphasizes the optimization of resource allocation and the adjustment of economic structure more than monetary policy, which has structural characteristics. The focus of monetary policy is to adjust the total social demand, which has the characteristics of total social demand. Only when financial means and monetary means give full play to their respective advantages and coordinate with each other can we combine the allocation of resources by the government and the allocation of resources by the market, and at the same time effectively stimulate demand, give consideration to the goal of economic restructuring and upgrading.
Fiscal policy regulates the economic structure by changing income and expenditure. Because the adjustment of tax burden and expenditure scale involves a wide range and has strong policy, it is directly related to the distribution of national financial resources and is limited by national financial resources. Therefore, the fiscal deficit or balance should not be too large, which makes the adjustment of fiscal policy to total demand have certain limitations. On the contrary, fiscal policy plays a much greater role in regulating the structure of social supply and demand. Market mechanism can realize the optimal allocation of economic resources, but it has to pay a certain price. In order to reduce the waste of resources, the government needs to use fiscal policy to intervene. The adjustment of financial policy to economic structure is mainly manifested in: by expanding or reducing financial input to a certain industry, to? Encourage? Or? Depressed? The development of this industry. Even if the total expenditure remains unchanged, the government can directly carry out a certain industry through differential tax rates and income policies? Support? Or? Restrictions? So as to optimize the allocation of resources and adjust the economic structure.
The advantage of monetary policy expansion is that it can not only fully mobilize the existing currency, but also directly distribute the base currency, which is incomparable to investment and consumption expansion. Its essence is to absorb more savings, inject into the real economy, and then increase the money supply according to the multiplier effect. From the perspective of inducing aggregate demand expansion, interest rate cuts are the most attractive to investors and consumers. China's current system basically does not allow the implementation of financial loans, financial support for investment, or free grants, or interest subsidies, but the amount of these two funds is relatively small, it is impossible to expand significantly, because financial expenditure is mainly to ensure the supply of products. The expansion of money supply just dispelled people's expectations of financial funds. At present, to stimulate total demand, from the perspective of guiding the investment and consumption of the whole society, the biggest impact is the expansion of money supply. However, the role of monetary policy in regulating the structure of social supply and demand and the proportional relationship of the national economy is relatively limited. The central bank uses legal reserve ratio, rediscount interest rate, interest rate, credit scale, open market business and other tools to increase or decrease the money supply, thus adjusting the total social demand. However, because bank credit funds are profit-seeking, the basic requirements of market principles should be reflected in promoting resource allocation. The government cannot expect credit funds to be directly invested in industries with low expected returns, especially public goods industries, according to the government's macro-control objectives. If a bank credit fund does this, there is often financial support behind it.
In order to better solve the contradiction between social and economic structure and total amount, it is necessary to coordinate fiscal policy and monetary policy according to their different emphases. Fiscal policy directly affects the economic structure and indirectly affects the economic aggregate; Monetary policy directly affects the economic aggregate and indirectly affects the economic structure.
From the perspective of fiscal policy adjustment, the adjustment of total supply is first reflected in the adjustment of social and economic structure, such as fiscal use of taxation, interest subsidies and investment policies to guide the flow of money to emerging industries and bottleneck industries and optimize the industrial structure; The adjustment of total demand is mainly to stimulate and restrain social total demand by expanding or reducing fiscal expenditure and taking structural adjustment as the premise. The adjustment of monetary policy to the total social demand is mainly to control the quantity of base money through the money supply and refinancing of the central bank, and to control the multiplier of base money through the reserve ratio and rediscount interest rate, thus effectively controlling the total social demand. At the same time, on the basis of controlling the total social demand, the central bank will also play a certain regulatory role in the social and economic structure.
Generally speaking, the use of fiscal policy to start the economy is more direct and rapid, which has obvious promotion effect on economic growth and often has immediate effect, and is suitable for projects with strong commonality and difficult to obtain direct returns. Monetary policy needs to indirectly affect the society through commercial banks and the whole financial system, and its effect usually has a certain time lag, which is suitable for those projects that can get direct returns in a short time. At the same time, the technological transformation needed to improve international competitiveness and the development of a large number of small and medium-sized enterprises needed to solve employment mainly rely not on financial means, but more on the support of credit means. According to the return, some infrastructure construction can be started by financial means, and some can also absorb non-financial funds, including credit funds. It is precisely because financial means and monetary means have their own advantages and disadvantages that they must work closely together to speed up the optimization and upgrading of the social supply and demand structure on the premise of realizing the total balance of social supply and demand. Only in this way can we foster strengths and avoid weaknesses and promote comprehensive, coordinated and stable social and economic development.
Three conclusions
Fiscal policy is not isolated, and attention should be paid to avoiding the conflict and offset between fiscal policy and monetary policy. The extent to which fiscal expenditure should be expanded depends on many factors, and the principle that can be grasped is to let fiscal policy play a unique role in areas where monetary policy is not effective enough. When monetary policy has played a role in stimulating demand, we can consider reducing the expansion of fiscal expenditure.
refer to
Li Chao. On the relationship between finance and financial stability in China [J]. China Administration, 20 1 1( 10)
[2] Li? The View of Fiscal Deficit and the Analysis of American Government Debt [J]. Economic Trends, 20 1 1(9)
[3] Xu Tangxian. Reflections on financial work in the new period [J]. China Finance, 20 1 1, (18)
[4], Yu, Liu Xinbo. China's fiscal policy choice in the world economic dilemma [J]. Macroeconomic Research, 20 1 1( 19)
Click the next page for details >>& gt On the role of monetary policy and fiscal policy?