Abstract
The uncertainty of economic policy, a specific form of uncertainty, can affect both economic growth, and the effectiveness of the macroeconomic regulation and control policy. Existing studies have analyzed the impacts of economic policy uncertainty on investment, consumption, trade, and total factor survival, but there is no analysis of the effectiveness of macroeconomic regulation and control policies on output and technological progress in a deterministic environment. Output growth and technological progress show the performance of economic growth in gross and efficiency, respectively, which is the external performance and internal driving force of economic growth. To achieve long-term sustainable economic development, it is necessary to consider both the aggregate problem and technological progress. In this context, this paper attempts to explore the effectiveness of China’s macroeconomic regulation and control policy on output growth and technological progress under the economic policy uncertainty. Specifically, this paper first analyzes the effectiveness of macroeconomic regulation and control policy on China’s output growth and technological progress in an uncertain environment, and then makes an empirical study by constructing a time-varying parameter vector autoregression model (TVP-VAR). Furthermore, the simulation test of the relevant results is carried out using the counter-fact analysis method. The empirical results show that: (1) under the uncertainty environment, the direction of the effect of price monetary policy on output has not changed, the effect of interest rate increase on output growth is negative, and the impact is stronger in the short term than in the medium and long term; the effect of rising interest rates on technological progress is positive, and the effect intensity is also significant in the short term, but weak in the medium and long term, the effect of price monetary policy on output is stronger under moderate uncertainty. (2) Credit growth can promote output growth, and the regulation effect of credit growth on output growth is mainly reflected in the short term under the TVP-VAR model, the effect of credit growth on technological progress is not significant. Further research using counterfactual analysis shows that the uncertain environment will reduce the effect of credit policy on output growth, but the effect is not significant.
Highlights
China’s economy has entered a new normal
Under the uncertainty environment, the direction of the effect of price monetary policy on output has not changed, the effect of interest rate increase on output growth is negative, and the impact is stronger in the short term than in the medium and long term; the effect of rising interest rates on technological progress is positive, and the effect intensity is significant in the short term, but weak in the medium and long term, the effect of price monetary policy on output is stronger under moderate uncertainty
Macroeconomic regulation and control policies in different uncertain environments may be heterogeneous. This leads us to the following questions: in the face of varying degrees of economic policy uncertainty, how effective are monetary policy and credit policy? At the same time, are there any differences and similarities in the effects of these two kinds of regulation policies on output and technological progress? Sorting out these questions will enrich existing research, and provide empirical evidence for policymaking in the macroeconomic regulation and control
Summary
China’s economy has entered a new normal. To achieve economic growth in the future, it is important to consider both the scale of total output and the efficiency of growth. Pellegrino [24] used a non-linear interactive vector autoregressive (VAR) model to study whether the level of European uncertainty affects the effectiveness of monetary policy shocks in the Euro area. Macroeconomic regulation and control policies in different uncertain environments may be heterogeneous This leads us to the following questions: in the face of varying degrees of economic policy uncertainty, how effective are monetary policy and credit policy? The rest of this paper is arranged as follows: Section 2 analyzes the effectiveness of price monetary policy and credit policy in macro-control policy, and further investigates the impact mechanism of macro-control policy on output and technological progress under an uncertain environment.
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