Generally speaking, in countries with developed market economy, the basic experience of macro-control is that whenever deflation occurs, loose policies are implemented from both fiscal and monetary aspects to promote economic recovery. But in China, the "double pine" policy often leads to many economic problems. It is a better choice to adopt a "tight" fiscal and monetary policy. But how do the two work together? It remains to be studied and explored.
Necessity of coordination between fiscal policy and monetary policy
Fiscal policy and monetary policy are two different channels for the state to allocate funds centrally. Although both of them can adjust the total social demand and total supply, their roles are different in the formation of consumption demand and investment demand, and these roles are irreplaceable.
1. Their mechanisms of action are different. Finance directly participates in the distribution of national income and redistributes concentrated national income within the whole society. Financial distribution is generally free. Finance can influence the formation of social demand from two directions: income and expenditure. Credit policy is the main channel for the state to redistribute monetary funds. This redistribution of monetary funds does not directly participate in the national income distribution except interest, but is based on the redistribution of national income distribution and financial redistribution, which mainly affects the formation of consumer demand and investment demand through the expansion and contraction of credit scale.
They move in different directions. Judging from the formation of consumer demand, social consumer demand is basically formed through fiscal expenditure, so fiscal policy plays a decisive role in the formation of social consumer demand. Monetary policy indirectly affects personal consumption demand mainly through the management and supervision of wage funds and the control of cash delivery. Judging from the formation of investment demand, although both finance and banks provide funds for the reproduction process, the emphasis is different. Under China's current system, fixed assets investment is funded by finance, and working capital investment is generally funded by banks. It can also be seen from here that the role of fiscal policy in forming investment demand is mainly to adjust the industrial structure and promote the rationalization of the national economic structure, while the role of monetary policy is mainly to adjust the total amount and product structure.
They play different roles in expanding and tightening demand. Fiscal deficit can expand demand and fiscal surplus can tighten demand, but finance itself does not have the ability to directly create demand, that is, "create money." The only thing that can create demand and money is money and credit. Therefore, the expansion and contraction effects of finance must be transmitted through the credit mechanism. Moreover, banks themselves can directly expand and tighten demand through the expansion and contraction of credit scale. In this sense, bank credit is the general gate to expand or tighten demand.
It is precisely because fiscal policy and monetary policy have different roles in the formation of consumer demand and investment demand that fiscal policy and monetary policy must be used together. If fiscal policy and monetary policy go their own way, there will inevitably be collisions and frictions, which will offset each other, thus weakening the effect and intensity of macroeconomic regulation and control, and it is difficult to achieve the expected economic regulation and control goals.
Different combinations of fiscal policy and monetary policy and their effects
1. loose fiscal policy and loose monetary policy. Song's fiscal policy refers to increasing the total social demand by reducing taxes and expanding the scale of government expenditure; Loose monetary policy refers to reducing the statutory reserve ratio and interest rate, expanding the scale of credit expenditure and increasing the money supply. Due to the "double pine" policy, the total social demand will inevitably expand. In the case that the total social demand is seriously insufficient and the production capacity and resources are not fully utilized, this kind of policy cooperation can stimulate economic growth and expand employment, but it is in danger of inflation.
2. Tight fiscal policy and tight monetary policy. Tightening fiscal policy refers to limiting consumption and investment and restraining total social demand by increasing taxes and reducing the scale of government expenditure. Tight monetary policy refers to reducing the scale of expenditure and money supply by raising the statutory reserve ratio and raising interest rates. This policy combination can effectively prevent demand inflation and inflation, but it may bring the consequences of economic stagnation.
3. Tight fiscal policy and loose monetary policy. Tight fiscal policy can restrain the total social demand, prevent the economy from being too prosperous and stop inflation; The loose monetary policy lies in maintaining moderate economic growth. Therefore, the effect of this policy combination is to maintain moderate economic growth while controlling inflation. However, monetary policy is too loose to stop inflation.
4. Loose fiscal policy and tight monetary policy. Song's fiscal policy is to stimulate demand, which is more effective in overcoming economic depression; Tight monetary policy can avoid excessive inflation. Therefore, the effect of this policy combination is to avoid inflation as much as possible while maintaining moderate economic growth.
How to effectively implement a proactive fiscal policy and a prudent monetary policy?
From the above policy combination, it can be seen that adopting a proactive fiscal policy and a prudent monetary policy is a wise choice, which is conducive to achieving the policy objectives of accelerating China's economic growth and maintaining a moderate inflation rate. After more than three years' efforts, China has overcome the difficulties brought by the Asian financial crisis, and its economic development has taken an important turn for the better. However, we should be soberly aware that the foundation of economic recovery is not stable and the task of economic restructuring is still very arduous. In order to maintain the current good momentum of economic development, while continuing to implement a proactive fiscal policy, we should study how to implement a prudent monetary policy.
(1) We should continue to implement a proactive fiscal policy in the near and medium term. The reasons are as follows: 1. In the past four years, China's national debt issuance has totaled 500.405 billion yuan, with more than 6,000 actual projects. The total investment of these 6,000-odd projects is about 2.4 trillion yuan, of which10.5 trillion yuan has been invested. If these projects are stopped, won't they all become semi-finished projects? Building projects is the so-called "golden horse, silver horse". It costs money to get on the horse, and it costs money to get off the horse. Therefore, we can't immediately adjust our policies without making some changes. 2. Infrastructure and basic industries are highly related to industry. The "bottleneck" constraints in infrastructure and other aspects are not only related to the previous economic fluctuations and industrial structure imbalance, but also have a significant impact on the current and future development of the entire national economy. In order to speed up the adjustment of industrial structure and promote stable economic growth, it is necessary to further increase investment in infrastructure and basic industries at present and in the future. 3. In order to support the implementation of major reforms, financial expenditure must be increased accordingly.
(2) Resolutely maintain a prudent monetary policy. How to implement a prudent monetary policy, I think it mainly focuses on the following aspects:
1. Implement various monetary policy measures that have been introduced. It is mainly to adjust the money supply in time to meet the reasonable demand of economic development for money supply. At present, the deposit reserve ratio and deposit and loan interest rate of commercial banks in the central bank are in line with the macroeconomic development situation and should remain stable. Guide financial institutions to adjust credit investment and continue to provide loan support for fixed assets investment arranged by national debt; Effectively increase loan support for small and medium-sized enterprises and high-tech enterprises; Continue to increase the "three rural" loans to help farmers increase their income; Vigorously develop consumer credit; In order to change the situation that enterprises rely too much on indirect financing from banks, we should support the development of industrial investment funds and various forms of direct financing.
2. Accelerate the development of the money market and steadily push forward the interest rate marketization reform. Mainly to develop the money market including interbank lending market, bond market and bill market, further improve the electronic trading system of interbank lending and bond market, and develop new money market trading tools such as financial bonds and mortgage bonds; Actively cultivate the bill market, making it an important place for enterprises and banks to carry out short-term capital financing. In order to better allocate resources and promote economic restructuring, we must steadily push forward the interest rate reform and establish a market interest rate system based on the central bank interest rate, with the money market interest rate as the intermediary, and the deposit and loan interest rates of financial institutions are determined by market supply and demand.
3. Establish a modern banking system and improve the transmission mechanism of monetary policy. Support commercial banks to carry out shareholding system reform, increase capital and improve transparency. Support qualified joint-stock commercial banks to go public, instead of being recommended by the central bank. Commercial banks apply for listing, and the central bank provides financial supervision information. Support wholly state-owned commercial banks to carry out comprehensive reforms in accordance with the modern banking system.
4. Continue to strengthen financial supervision and improve the financial supervision system. Conduct a comprehensive inspection of the authenticity of financial enterprises' asset quality, profit and loss, capital adequacy ratio and internal control system, and seriously investigate and deal with illegal operations. Vigorously support banks to develop intermediary business. Strengthen cooperation among banking, securities and insurance regulatory authorities, communicate information and improve the level of financial supervision.
5. Continue to expand financial opening to the outside world. Strengthen foreign exchange management, crack down on foreign exchange evasion and fraud, and maintain the balance of international payments. Improve the managed floating exchange rate system of RMB determined by market supply and demand, and maintain the stability of RMB exchange rate. With the further expansion of financial opening to the outside world, we must attach great importance to and correctly handle the relationship between local currency and foreign currency, interest rate and exchange rate, strictly implement the convertibility of RMB under current account, and effectively strengthen the control of capital account to create conditions for promoting the convertibility process under capital account. (