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The dynamics of Structural Fiscal regulating and Fiscal tools
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TitleThe dynamics of Structural Fiscal regulating and Fiscal tools  
AuthorBian Zhicun and Yang Yuanyuan  
OrganizationSchool of Finance, Nanjing University of Finance and Economics; 
Key Wordsthe New Normal; Structural Regulations; New Keynesian Model; Fiscal tools 
AbstractConsidering two kinds of individual behaviors about the Ricardian and non-Ricardian residents, the paper builds a new Keynesian dynamic stochastic general equilibrium model to form a more systematic study framework about structural financial tools. The study finds that the macroeconomic effects of different financial instruments are significantly distinct. The tools should be evaluated differently and selected carefully while implementing financial macro-control. Also, simulation results show that the impact of tax-cutting is relatively better than expenditure expansion.The government should change the way of usual fiscal macro-control and gradually adjust from massive spending policy to structural tax-cutting policy on the occasion that the economy is slowing down, along with the expenditure-based stimulus policies working weakly.This paper argues that the government should further carry out the mode of Public-private Partnership, and spending priorities should be inclined to social security, health care, pension and public service as well, gradually promoting a more service-oriented government operating style; tax policy should be based primarily on consumption tax-cutting to effectively transform the demand structure of economy to a consumer-driven.  
Serial NumberWP958 
  • Institute of Economics, Chinese Academy of Social Sciences
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