Macroeconomic econometric analysis of government policy

Abstract

This paper first proposes three indicators, gross domestic product (GDP), consumer price index (CPI) and producer price index (PPI), to quantitatively describe the macroeconomic situation based on the theory of macroeconomic indicators. Next, in view of the fiscal and monetary policies promulgated by the Chinese government, two indicators, namely government budget expenditure, and new credit, are selected to quantitatively describe the government's economic policies. Then the Granger causality test and Johansen cointegration relationship analysis are conducted between these indicators. The study found that there is no significant causal relationship between China's government budget expenditure, new loans and GDP, but the long-term cointegration relationship is obvious, and this relationship is positive. And found that there is not only a significant bi-causal relationship between the price indexes (CPI, PPI), but also a long-term positive cointegration relationship. On this basis, a VEC model between government budget expenditure and GDP, CPI and PPI was established based on the integrity of the indicators, and a VAR model was stablished between the amount of credit and GDP, CPI and PPI.