All governments face increasingly frequent issues arising from aggregate supply and demand against currency circulation and financial stability,and public finance and banking authorities employ a variety of policy ins...All governments face increasingly frequent issues arising from aggregate supply and demand against currency circulation and financial stability,and public finance and banking authorities employ a variety of policy instruments to keep the economy stable and coordinated.How to avoid policy conflicts and maximize effectiveness in policy portfolio of local government borrowing,which is taken as a major macro-control instrument,is a subject that needs in-depth study.This paper probes into local government borrowing’s monetary effect and transmission mechanism and its best synergistic model with monetary policy by the construction of a NK-DSGE model covering financial frictions,multi-period bonds and borrowing rules.The findings are as follows.(1)The shocks of one-percent local government borrowing(bond duration=5 years)push up the money multiplier by 0.39%to produce expansionary monetary effect,and the longer the bond duration,the greater the effect.(2)In the context of physical and financial shocks,monetary policy adopts a moderately tight reverse synergy with local government borrowing,effectively restraining its expansionary monetary effect for better economic stability and recovery.(3)For bonds with longer maturities,raising the risk sensitivity of local government borrowing rules benefits the improvement of welfare.展开更多
基金“Measurement and Optimizing Mechanism of Fiscal Resource Allocation Efficiency under Constraints of Tax&Fee Cuts and Debt Expansion”,a Humanities and Social Sciences General Research Program of the Ministry of Education(20YJA790046)“Transformation Mechanism of Local Government Debt Risk from the Perspective of Public Finance and Banking Synergy”,a Social Science General Research Program of Sichuan Province(SC22B047).
文摘All governments face increasingly frequent issues arising from aggregate supply and demand against currency circulation and financial stability,and public finance and banking authorities employ a variety of policy instruments to keep the economy stable and coordinated.How to avoid policy conflicts and maximize effectiveness in policy portfolio of local government borrowing,which is taken as a major macro-control instrument,is a subject that needs in-depth study.This paper probes into local government borrowing’s monetary effect and transmission mechanism and its best synergistic model with monetary policy by the construction of a NK-DSGE model covering financial frictions,multi-period bonds and borrowing rules.The findings are as follows.(1)The shocks of one-percent local government borrowing(bond duration=5 years)push up the money multiplier by 0.39%to produce expansionary monetary effect,and the longer the bond duration,the greater the effect.(2)In the context of physical and financial shocks,monetary policy adopts a moderately tight reverse synergy with local government borrowing,effectively restraining its expansionary monetary effect for better economic stability and recovery.(3)For bonds with longer maturities,raising the risk sensitivity of local government borrowing rules benefits the improvement of welfare.
