CHU Deyin,CUI Lili:Asymmetric Effect of Fiscal Policy on the Actual Output in China

Abstract：In order to use fiscal policies to control output under different situations of the economic cycle, the government should not only make scientific choice to decide the policy direction, but also accurately grasp the intensity and rhythm of policy. Based on the linear SVAR model, this paper chooses actual output gap as threshold variable. Then, the paper uses the nonlinear threshold SVAR model and the generalized impulse response function to comprehensively inspect the regulation effect of fiscal policy on the actual output. The results show that, compared with linear impulse response function, the impulse of fiscal policy has an asymmetric Keynesian effect on the actual output in the “good” and “bad” periods. On one hand, the current pulling effect of government spending impulse on the actual output in the “bad” period is 0.1742 percentage point higher than that in the “good” period, and the cumulative pulling effect is more durable and apparent. On the other hand, the current inhibiting effect of government tax impulse on the actual output in the “bad” period is 0.4680 percentage point higher than that in the “good” period, and the change orbits of hysteretic effect are basically the same in both “good” and “bad” periods, but the absolute amplitudes differ. The conclusion of the paper could provide practical basis for the government to adopt fiscal policy to implement interval control and directional control, and decision reference to government for formulating fiscal policy, and help to improve China's fiscal policy's operation efficiency. At last, it might help improve the scientific nature of interval control of fiscal policy and the accuracy of directional control.

Key words： Economic Cycle    Fiscal Policy    Nonlinear SVAR Model    Generalized Impulse Response Function

source:Finance & Trade Economics ,No.12,2014