DENG Liping,LIN Feng:Dynamic Shock Effects of Fiscal Expenditure on Trade Balance in China

Abstract  Under the condition of an open economy, it is indeed an empirical issue to test the impacts of a country's fiscal policy application on its trade balance.This paper conducts empirical research by PVAR model to test the dynamic shock impacts of China's fiscal expenditure on trade balance.It shows that as a whole, China's fiscal expenditure exerts rare effects on trade balance.The shock impacts have significant regional heterogeneity in terms of impulse strength, convergence path, cumulative effects, and associated mechanism.We also find that economic development has an important impact on the linkage between fiscal policy and trade policy.Based on this, we put forwards to the suggestions for fiscal and trade policy coordination.

Key words： Fiscal Expenditure    Trade Balance    Dynamic Shock Effects

Source: Finance & Trade Economics , No.9, 2014