Stagflationary effect of government bond financing in the transforming Chinese economy: a general equilibrium analysis

• 成果类型: Article
• 署名作者: Fung, MKY; Ho, WM; Zhu, LJ
• 署名单位: Chinese University of Hong Kong; York University - Canada; University of Waterloo; National University of Singapore
• 刊物名称: JOURNAL OF DEVELOPMENT ECONOMICS
• ISSN/ISSBN: 0304-3878
• DOI: 10.1016/S0304-3878(99)00063-2
• 发表日期: 2000
• 页码: 111-135
• 关键词: economic transformation; government debt finance; endogenous growth model; stagflationary effect; The Chinese economy

摘要

This paper studies how the method of government debt financing affects the macroeconomic performance of the transforming Chinese economy. The investigation Is conducted within the context of an endogenous growth model that incorporates the major institutional features of the Chinese economy. Using this framework, we evaluate the effects on the growth rate of output and inflation if the Chinese government relies more on bonds and less on money creation for budget deficit and debt repayment financing. It is shown that although this policy change can reduce the growth rate of the money supply, it can generate a stagflationary effect: reducing the rate of output growth while raising the rate of inflation, if the initial fraction of government deficit and debt repayment financed by bonds is sufficiently small and the tax rate on labor income is sufficiently low. (C) 2000 Elsevier Science B.V. All rights reserved. JEL classification: E6; O4; P2.