Macro-control Policies Research Articles

Aging and the Effectiveness of Fiscal and Monetary Policies

This paper introduces the population structure, the fiscal expenditure structure and the monetary policy into the new Keynesian dynamic stochastic general equilibrium framework, focusing on the analysis of the impact of population aging on China’s macro-economic control policies. The results of the study show that: In addition to the negative impact of the aging population itself on economic growth, the space for maneuvers left for macro-control policies has become increasingly limited, affecting the effectiveness of policy control and increasing the cost of policy implementation. First, with the aging population structure, the positive effects of macroeconomic control policies have been weakened and the negative effects have been strengthened. This shows that population aging has undoubtedly weakened the effectiveness of fiscal and monetary policies. In terms of macroeconomics, the basic effect of population aging is that it will profoundly change the relationship between the national income distribution pattern and the allocation of economic resources. In the long run, population aging reduces labor supply, and the overall economic life cycle gap widens the lack of economic growth and the overall welfare level of society continues to decline. In the short term, accelerating the burden of financial pensions has significantly reduced the space for fiscal policy maneuvers and also weakened the ability of the government to implement anti-cyclical fiscal policies. In terms of policy assessment, the decline in fiscal multipliers has masked the enthusiasm of the financial sector, amplifying its crowding-out effect and impairing the quality of financial performance. In terms of the monetary policy, population aging may bring deflationary pressures, limit the monetary policy’s ability to stimulate aggregate demands, force the Central Bank to adopt more radical measures to achieve the same effect, and be directly exposed to higher macro-economic risk exposures and strengthen financial fragility. Second, in the elderly-dominated society, the central bank’s tolerance for inflation rate has decreased, and interest rate adjustments are more likely to approach the lower limit. Once these new weighing factors are superimposed on the cycle, they will further complicate the operation of the monetary policy. The Central Bank must not only prevent the spread of inflation, protect the economic interests of the elderly, but also prevent the hard landing” economic risks caused by excessive tightening. Objectively, the frequency of policy switching will exceed the previous level, and unconventional monetary policies will probably become the norm. In terms of stabilizing the economy and finance, the lack of effective demand caused by population aging has weakened the effectiveness of traditional monetary policy operations. Severe aging may further trigger liquidity traps and no longer be affected by loose monetary policies. Low interest rates are stimulating investment and consumption. The role is limited. Enterprises no longer pursue profit maximization but minimize debt. As a result, the demand for bank credit is insufficient and the liquidity of the central bank is difficult to release. Under such circumstances, structural reform will become a necessary supplement to the monetary policy. Third, increasing the proportion of working population and maximizing the negative effects of accelerating population aging can greatly improve and increase the effectiveness of fiscal and monetary policies. The loose population policy does not necessarily change the demographic structure and promote economic growth in the short term. The economic problems brought about by population aging are a rather complicated social project. It is not simply a matter of opening up policies and stimulating fertility” that can open the door to alleviate the aging population. Moreover, increasing the labor participation rate will increase the proportion of the working population to a certain extent, effectively increase the supply of labor force, and reduce the tax burden on each of the young people. More importantly, increasing the labor participation rate can effectively increase the labor supply, not only helping to ease the burden of government pensions and guaranteeing the reliability of the pension system in the medium term, but also helping to reduce macroeconomic fluctuations, expand fiscal and monetary policies to create more space for operations, stimulate private consumption and investment, and drive economic growth.

Financial Stress and Its Impact on the Business Cycle in China

Financial stress is the state of the financial system when it is affected by its own vulnerability, uncertainty and various external shocks. Rationally measuring financial stress and exploring the impact of financial stress on the business cycle, is one of the core issues in the new economics” theory which is based on financial stability, and it is also a hot topic that academia and decision-making departments pay close attention to. However, in the related research on financial stress, domestic and foreign scholars have always faced two problems: Firstly, how to accurately measure financial stress under the complex and volatile economic and financial situation? Secondly, how to reasonably portray the relationship between financial stress and the business cycle in different periods? In recent years, with the continuous advancement of economic globalization and financial integration, the potential stress of the financial system has gradually emerged, and has been continuously accumulating and spreading through the financial accelerator effect and pro-cyclical effect of the financial system. Financial stress not only has a significant impact on the operation of the macro economy, but also poses serious challenges to macro-prudential supervision and financial risk prevention and control. Therefore, solving the above two problems not only helps to understand the operating laws of China’s macroeconomic and financial systems from the perspective of financial stress, but also has an important practical significance for improving the foresightedness and effectiveness of the macro-control policies. In view of this, this paper measures financial stress of China from exchange market pressure, bankingsystem pressure and financial bubble pressure respectively, incorporates all financial sub-markets into a unified framework, and then synthesizes China’s financial stress index （CFSI） based on the dynamic CRITIC method. The analysis shows that the CFSI constructed in this paper is highly coupled with the operation of China’s financial system and can reasonably reflect the stress conditions of the financial system. On this basis, this paper analyzes the typical differences in the evolution of CFSI during different periods, especially before and after the financial crisis. The empirical results obtained by using the MSAR model show that after the crisis, China’s financial stress changes show a series of asymmetric features such as rapid accumulation and slow release. Furthermore, based on the TVP-VAR model, this paper empirically explores the nonlinear impact of financial stress changes on the business cycle in China from the perspectives of the financial sub-market and the entire financial system. The results show that: firstly, the suppression effect of financial stress accumulation on the business cycle is more significant than the promotion effect of financial stress relief on the business cycle; secondly, the time lag and the limitation of monetary policy may lead to a pro-cyclical” phenomenon of financial stress and the business cycle, and then may amplify the impact of financial stress on the business cycle; finally, the suppression effects of all sub-markets’ financial stress on the business cycle show different time-varying dynamics, but all show obvious state-dependent characteristics. These findings not only help to further understand China’s macroeconomic and financial system operating conditions in the new era, but also provide useful empirical references and policy implications for the perfection of the financial regulatory system and macroeconomic control policies. This paper argues that, on the basis of paying close attention to the evolution of China’s financial stress, on the one hand, policy-makers should improve the framework of regulation underpinned by monetary policies and macro-prudential policies, and give full play to the role of macro-prudential policies in suppressing the pro-cyclical volatility of the financial system and preventing cross-market infections of risks. On the other hand, they should innovate means of macro control, use various policy tools in a flexible and appropriate fashion to carry out timely and moderate pro-cyclical fine-tuning of key areas and weak links, so as to achieve key targets for the dual stability of economics and finance.

Study on the Reasons and Countermeasure of Bank Accounting Information Distortion

As the core enterprise of economic development in China, the accounting information about banks is also an important basis of the financial adjustment of the country. The accuracy and authenticity of bank information plays an important role in the development of economy and finance. For the macro-control policies that has a great reference, but also conducive to the statistics of bank accounting information. This article will analyze the causes and countermeasures of bank accounting information distortion and put forward corresponding measures.

Literature Review on Importing Tax Policy of China’s Luxury Goods

Since China’s reform and opening up, China’s economic level has improved significantly and obtained a fast steady development; residents’ disposable income has increased rapidly. Based on the economic growth, the rich people quickly emerge and have a strong desire for luxury consumption. But at the same time, the outflow of luxury goods’ consumption in China is serious. After entering into the “new normal”, China has become the country which obtained the largest luxury goods consumption in the world. It also becomes the largest overseas luxury goods consumption in the world. At present, China’s luxury goods market in the “New Normal” faces a great deal of opportunities and challenges. Luxury goods consumption in China shows a blind heat and consumption drain, which have adversely affected the economic development of our country. For instance, the wealth gap is widening, revenue is reducing, social equality is missing and domestic demand is insufficient etc. These issues have become the great problem which is perplexing Chinese and causing widespread public concern. It is urgent to take measures to curb the rise and outflow of consumption. Among them, the tax adjustment on the import of luxury goods is the most important one. As the government’s macro-control policies, adjusting tariff and consumption tax of luxury can lead a right way to develop the luxury goods market. Many domestic and foreign scholars have got in-depth analysis about these issues from the perspective of tax policy. These discussions help the growth of local luxury goods industry and the reasonable formulation about luxury tax policies in China. This paper focuses on summarizing the research literature on importing tax policy of China’s luxury goods. It has a very important theoretical and practical significance.

Study on Relativity between China’s Nominal GDP and the Shanghai Securities Composite Index

By implementing X-11 process to eliminate the seasonal effect from the data of nominal GDP and Shanghai Securities Composite Index from 1996 to 2015, conducting co-integration test and Granger causality test on these processed data, and examining the leading characteristics of the securities index with the Lag regression model, the present thesis finally conducts a detailed analysis of the research results and puts forward some policy recommendations. The study suggests that there is a stable positive-correlating long-term relationship between Shanghai securities composite index and nominal GDP, the former being the Grainger causes for the latter, which mainly arises from the improvement in the institution of the stock market and the larger ratio of the stock market capitalization to that of nominal GDP. In addition, the increasing liquidity of long-term stock market and investors’ speculation to the stock market based on the national macro-control policies also elucidated the inherent property of Shanghai Composite Index as a leading indicator of Chinese Nominal GDP in the results presented.

Research on the Policies and Means Changes of Macro Regulation and Control of Chinese and Foreign Governments

In the process of economic development, government uses the "visible hand" to achieve macroeconomic regulation and control for "market failure", which has been common knowledge among people after World War II. Comparing policy and means adopted by Chinese and foreign governments in macro regulation and control, we can see that the choice is different in different historical periods and the change of emphasis in macro regulation and control policy and means has the convergence tendency. We can make the following conclusion from research of the change rules of macro regulation and control means in the market economic condition of Chinese and foreign governments: supply-side structural reform in China complies with the basic rules of development of market economy.

Policy Impact on the Chinese Stock Market: From the 1994 Bailout Policies to the 2015 Shanghai-Hong Kong Stock Connect

From the 1994 bailout policies to the 2015 Shanghai-Hong Kong Stock Connect, the policy impact on the Chinese stock market has changed over time. By May 2015, global investors can directly invest in a more legalized and normalized Chinese stock market, whereas they are still concerned about the policy-oriented market and its attendant risks. In this study, we employ the family of GARCH models to investigate the structural changes in risks with the implementation of a series of policies. Our results show that although many policies improve or stabilize the stock market, certain policies lead to substantial volatility. Among them, macro-control policies and transaction cost adjustments are a double-edged sword, which should be used with caution. Furthermore, with opening-up policies being launched recently, the Chinese stock market has entered a new stage in which it affects international capital markets. However, the increased risks, which may result in a sharp turnaround, cause worry.

An input–output structural decomposition analysis of changes in sectoral water footprint in China

Policy evolution in China has made great achievements in economic development, while its impact on water has also been significant. This study provides detailed insight into how diverse policy evolution affected the water footprint (WF) in China from 1997 to 2007 through input–output analysis and structural decomposition analysis. Input–output analysis was used to measure China's WF. The results indicate that the total WF in China decreased from 495.5 billion m3 in 1997 to 447.6 billion m3 in 2007. Structural decomposition analysis was applied to quantify the determinants of the changes in WF. The driving factors of the WF changes were decomposed into technology, sectoral connection, economic structure, gross economic scale and population. The results show that the sector with the most space to save water changed from agriculture to tertiary industry during the periods under study. Technology and economic structure effects always offset the WF increase, whereas gross economic scale effect always hindered water conservation. In 2002–2005, the sectoral connection effect abruptly changed from negative to positive, with the proportion of the total contribution rising to 60%. This phenomenon can be linked to market expansion, which led to a decrease in water utilization when China joined the WTO in 2001. To promote water conservation in China, macro-control policies should be formulated in coordination with self-readjustment policies.

Adaptability Adjustment of China’s Fiscal and Taxation Policies under “New Normal”—Based on Korea’s Experience

In recent years, the economic development of China has gradually showed the different characteristics from the past and has entered the new normal. Under the new normal, China’s economic growth trends and characteristics have undergone the great changes, the economic growth is in transition from high-speed growth to the medium-high-speed growth, and the economic growth model will be transferred from relying on exports and investment to relying on being driven by the domestic demand, the key for economic growth will be transferred from the factor driven to the innovation driven. At present, the main task of China’s economic development is to adapt to new normal. As an important means of national macro-control, fiscal and taxation policies have their own problem of inadequate system supply. This thesis intends to study the deficiencies of China’s fiscal and taxation policies under new normal, and propose the suggestions for the adaptability adjustment of fiscal and taxation policies. The study finds that under new normal, there’s difficult economic transition due to the insufficient supply of China’s fiscal and taxation policies in terms of the income, encourage innovation and environmental protection, and it is urgent to supplement and adjust China’s existing fiscal and taxation policies. Based on the reference to beneficial experiences of adjustment of Korea’s fiscal and taxation policies, combined with the actual situation of China, this thesis puts forward that the fiscal and taxation policies in China under new normal should be improved greatly from the aspects of tax structure, fiscal and taxation support of the scientific and technological innovation and fiscal and taxation policies of environmental protection, and others.

Analysis on Real Estate Enterprise Cost Accounting Problem

With the rapid and sustained development of China socialist market economy, the real estate industry has become the industry part that plays a dominant role in national economy. But the related accounting system of real estate enterprise is not perfect in China, and fails to have a full range of coverage, so part of the real estate enterprises will take advantage of the system vulnerabilities to do some illegal behaviors, including the manipulation of profits, the whitewash of statements and other violations, especially in the case of cost accounting. In this paper, by analyzing the reasons and current situation emerges in the cost accounting of the real estate industry in our country, will put forward corresponding countermeasures on the accounting of real estate enterprise accounting cost. In order to ensure the normal operation of the real estate business management, to ensure that the interests of investors, and then stabilize the socialist market economy to ensure that the formulation of state macro-control policy.

Analysis on Income Accounting of Real Estate Enterprises

With the rapid and sustained development of China socialist market economy, the real estate industry has become the industry part that plays a dominant role in national economy. But the related accounting system of real estate enterprise is not perfect in China and fails to have a full range of coverage, so part of the real estate enterprises will take advantage of the system vulnerabilities to do some illegal behaviors, including manipulating profits, whitewash statements and other violations, especially in the case of income accounting. In this paper, by analyzing the reason and current situation that emerges in the income accounting of the real estate industry in our country, here we will put forward corresponding countermeasures on the accounting income of real estate enterprise, in order to ensure the normal operation and management of real estate enterprises, to ensure the interests of investors, then to stabilize the socialist market economy, and to guarantee the formulation of state macro-control policy.

Regulating effect of the energy market—Theoretical and empirical analysis based on a novel energy prices–energy supply–economic growth dynamic system

Abstract It is known that the invisible hand – energy market can reflect the energy price. Follow this perspective, a net structure that every element can conduct mutually has been founded based on the causal relationships among energy price, energy supply and economic growth during a given economic period. Furthermore, a novel dynamic system model of energy price–energy supply–economic growth which can make sure the balanced development of energy market is proposed. Later, four types of regulatory strategies are offered with considerations of both the background of China’s certain economic transforming periods and the visible hand of control policies. Then regulating effect of the energy market is obtained. Dynamic behavior of the system and its subsystems are analyzed by means of Lyapunov exponents and bifurcation diagrams. Evolutionary behavior of the energy market affected by changes of energy prices, energy supply and economic growth is described with the method of numerical simulation. A practical system of energy prices is achieved, based on the data of the total energy production, the GDP index, the energy price index in China between 1980 and 2010 and the use of artificial neural network. Model analysis indicates that economic growth will lead to increase of energy supply and there will be two turning points of energy supply in the rapid growth of the economy. Multiple regulatory strategies in the established system are investigated. It is shown that Strategy 1 (exploring new energy sources), Strategy 2 (enhancing the self-regulating market), Strategy 3 (industrial restructuring, appropriately lowering the speed of economic growth, and enhancing the systematic and scientific management) can all stabilize the energy market, but Strategy 4 (purely relying on administrative interventions) cannot stabilize the system, as it will only make the system stay in the state of cycle shocks. An evolutionary analysis is made to show the impacts of different control strengths under the same strategy and that of different control strategies on the energy intensity. It is shown that the regulating effect is periodic and takes time. Reasonable control efforts can effectively reduce the energy intensity, but excessive regulation will be counterproductive. In the short term, Strategy 2 is an effective means to reduce the energy intensity to 0.4886 in about two years. However, in the long term, Strategy 1 and Strategy 3 are effective means to reduce the energy intensity, which are 0.4221 and 0.4343. And they will take about twelve and six years respectively. In general, the expected effect, that is, reducing the energy intensity to 0.3425 in about seven years can be achieved on the premise of maximizing the autonomous function of the market (Strategy 2), exploring new energy sources (Strategy 1) and industrial restructuring (Strategy 3) with appropriate macro-control policies (Strategy 4).

Study on Relativity between China's Macro-Economy and the Chinese Stock Index - An Empirical Analysis Based on China's Nominal GDP and Shanghai Securities Composite Index

By implementing X-11 process to eliminate the seasonal effect from the data of nominal GDP and Shanghai Securities Composite Index from 1996 to 2015, conducting co-integration test and Granger causality test on these processed data, and examining the leading characteristics of the securities index with the Lag regression model, the present thesis finally conducts a detailed analysis of the research results and puts forward some policy recommendations. The study suggests that there is a stable positive-correlating long-term relationship between Shanghai securities composite index and nominal GDP, the former being the Grainger causes for the latter, which mainly arises from the improvement in the institution of the stock market and the larger ratio of the stock market capitalization to that of nominal GDP. In addition, the increasing liquidity of long-term stock market and investors’ speculation to the stock market based on the national macro-control policies also elucidated the inherent property of Shanghai Composite Index as a leading indicator of Chinese Nominal GDP in the results presented.

Monetary policy and dynamic adjustment of corporate investment: A policy transmission channel perspective

We investigate monetary policy effects on corporate investment adjustment, using a sample of China’s A-share listed firms (2005–2012), under an asymmetic framework and from a monetary policy transmission channel perspective. We find that corporate investment adjustment is faster in expansionary than contractionary monetary policy periods. Monetary policy has a significant effect on adjustment speed through monetary and credit channels. An increase in the growth rate of money supply or credit accelerates adjustment. Both effects are significantly greater during tightening than expansionary periods. The monetary channel has significant asymmetry, whereas the credit channel has none. Leverage moderates the relationship between monetary policy and adjustment, with a greater effect in expansionary periods. This study enriches the corporate investment behavior literature and can help governments develop and optimize macro-control policies.

Identification of Real Estate Cycles in China Based on Artificial Neural Networks

In this paper, we use artificial neural networks to determine the real estate cycle in China. We identify its development phases based on 1993–2008 historical training samples. The results indicate that China's real estate market has oscillational characteristics and the artificial neural networks have predictive accuracy. In the context of continuously deepening governmental interventions, the volatility in real estate cycles has become more evident since 2008, when the market reached its peak in 2009, but quickly plunged into recession in 2010, and approached its trough in 2011. A series of governmental macro-control policies since 2008 have had tremendous impact on the duration and frequency of China's real estate cycles via actions aimed at controlling the expansion of the real estate industry.

The Analysis of China's Previous CPI Fluctuation Cycle

The current CPI fluctuation is one of the hot issues that people are common concerned, the monthly published data is also concerned. Facing the problem reported by CPI, we need to analyze deeply the CPI fluctuation cycle and study the law and characteristics of fluctuation, so as to find out the reason. This article refers to the H-P filtering method, the cycle is divided on the 1978-2011 monthly CPI data, found that since the reform and opening up, the CPI has experienced seven volatility cycles, moreover, the characteristics and causes are different between previous fluctuations, so analyzing characteristics of the previous CPI fluctuation cycle has a very important significance on maintaining the stability of the price level in the future and making the correct macro-control policy.

Problems and Countermeasures for our Country’s Sustainable Development of Real Estate Economy

In 2010 to 2013 the national macro-control policies on the real estate market has a strong compressive force, although the development of China's real estate investment market continued to grow still present, but under the influence of regulation just to be national policy, the growth momentum has slowed . In this paper, based on the current status of the domestic real estate industry, in line with the theoretical basis of sustainable development, in-depth analysis of the domestic real estate industry problems encountered in the development process, made some suggestions and solutions for sustainable development

Hangzhou Housing Demand Forecasting Model Based on BP Neural Network of Genetic Algorithm Optimization

Hangzhou, the capital of Zhejiang province and a famous scenic tourist city in China, goes at the forefront of the country for its high real estate prices, which hold a very important position of orientation to pricing in the real estate markets of the Yangtze River Delta region and of the whole country as well. The price trend of Hangzhou's real estate is even related to the sustainable development of the city. This paper uses the macro data on the housing market in Hangzhou during 1999-2012 to establish a forecasting model which is based on BP neural network of genetic algorithm optimization. With MATLAB software exploited for programming and simulation, the prediction made by the model about the housing demand in Hangzhou and the subsequent re-examination show that the model has high precision. But due to the impact of the national macro-control policies on housing market, the predictive value of some years may fluctuate to a certain extent.

Price anomalies and effectiveness of macro control policies: Evidence from Chinese housing markets

Since the housing market reform in 1998, China has experienced a rapid growth. Continuous surges in housing prices have been criticized by the public. In light of deviation of the price from its intrinsic value, the central government implements a series of policies to intervene the housing market, but makes little difference. Little vigorous academic work on the price anomaly and impact of macro-control measures has been conducted for housing markets in urban China. This research employs econometric methodologies to investigate the interactions between housing price and market fundamentals, in order to identify the existence of price anomaly in the housing markets of Beijing and Shanghai during 1998–2012. In addition, we conduct asymmetry analysis based on an advanced econometric model to investigate the impact of macro-control measures on price and volume. Our findings suggest that the market inefficiency is indicated by lack of interaction between housing supply and demand in Beijing and Shanghai. The opposite directions of impulse responses of price to income in the two cities are mainly attributed to the different market structures. While price anomalies are found occasionally, the housing prices are considered reasonable in Beijing and Shanghai for most of the time. Furthermore, the analysis on the role of macro-control policies in Chinese housing markets reveals that government interventions regulate the market ineffectively at the current stage.

Dynamic mechanism and present situation of rural settlement evolution in China

This paper provides a detailed analysis of the factors influencing the evolution of rural settlements, including natural environmental constraints, infrastructure, regional cultural inheritance and integration, urbanization and rural industrial transformation, land use reformation and innovation, rural household behavior conversion, macro-control policy factors, and so on. Based on differences between the ways and degree of effect on rural settlement evolution, these factors are classified into basic factors, new-type factors and mutation factors. The drive of basic factors mainly focuses on the traditional inheritance of rural settlements, the new-type factors mainly affect rural settlement transition, and the mutation factors may bring about sudden changes. All these factors constitute a “three-wheel” driving mechanism for the evolution of rural settlements, and shape three typical driver paths: slow smooth path under the basic factors, new path to rapid development under the new-type factors, and the sudden change path under the mutation factors. The paper also investigates the overall situation of rural settlement evolution in the aspects of settlement system, settlement scale, settlement morphology, settlement function, settlement culture, settlement environment, etc. The general process of rural settlement evolution is divided into four stages: initial, transitional, developmental, and mature stages.