The Influence of Monetary Policy and Fiscal Policy on the Rural Residents' Consumption

This paper conducts an empirical analysis of influence of fiscal expenditure supporting agriculture monetary supply on rural residents' s consumption by adopting a vector auto-regression model,based on the data from 1978 to 2011.The study indicated that:in the short term,fiscal policy is the Granger reason of rural residents' consumption,monetary policy is not the Granger reason of rural residents' consumption;in the long term,the comprehensive function of fiscal policy and monetary policy has a great influence on the of rural residents' consumption.Under the background of Economic Transition and Urbanization,Expanding Domestic Demand is the slogan.We should coordinate fiscal policy and monetary policy to promote the rural residents' consumption.

Intrinsic Contradictions of the Money Concept From Real Bill to Monetarism and Back Again

The Nobel laureate, Robert Lucas, declared 2003 in his presidential address to the American Economic Association, that the “central problem of depression-prevention has been solved, for all practical purposes, and has in fact been solved for many decades”. Today we stand in front of severe social unease in most OECD-countries and military conflicts are more severe than in many years. What do the economic scientists say？ What do they suggest？ Nothing! Are there any economic models for solving the problems？ Economics is a social science, but has forgotten this in the worshipping of “the market exchange” and the concept of equilibrium. This paper is a discourse of the economic theory in the light of the economic development after WW2. The focus is on the theoretical anomalies with respect to money in relation to the systemic changes of the financial sector from WW2 to the current structure. The globalized real development and ownership of capital imply that financial flows are less attached to real flows and furthermore that currencies and state securities became less secure. New financial technologies enforce new attitudes to money, finance, and financial control. The financial crises of 2008 showed the theoretical deficiencies of the ruling mainstream economic theory particularly in its attitude to the concept of money. The downgrading of the US 2011 by S＆P and the following turmoil showed the fragility and the chaotic structure of the apprehensions of the system. It is a bit ironic that the change of the global financial industry we experience today in its basic structure is similar to the system prevailing before 1810 and was advocated by Adam Smith, the so called Real Bill system. During the Napoleonic wars Britain’s financial system became exhausted not to say chaotic. It became the task of the two leading economists, Henry Thornton and David Ricardo to design a new system where Bank of England was the controller of the new system and the final design was taken as a law 1844 Bank Charter Act. This was actually the formal birth of the modern structure of monetarist theory. Because of the increased global financial integration, which developed organically outside the control of national authorities due to new communication systems and some other technical innovations, we now have had a development back to something like the Real Bill system of pre-1810. This structural change calls for a definitive departure from the Monetarist theory, not necessarily by theoretical reason but because it does not fit into the current economic and financial structure.