Efficiency, mechanism of China’s macroeconomic policies

ZHANG Ping

Professor, Institute of Economics, Chinese Academy of Social Sciences
Abstract:

This paper discusses the effectiveness of macroeconomic policies under opening up conditions from theoretical and temporal perspectives. It notes that China’s economy is an export-oriented economy, but is not externally dependent. Marcoeconomic policies play an effective incentive role under the condition of changing exchange rates. In the economy of increasing return of scale, the policy incentives must be proactive and effective. China’s economy keeps an upward momentum of urbanization, which brings about substantial return of scale and led to an economic recovery. After the recovery sets in, however, the macroeconomic policies must change their focus and reduce direct intervention. Those with vested interest should withdraw to give greater play to the market. Short-term incentives should be balanced with long-term growth factors such as urbanization.

Key Words:

Effectiveness of macroeconomic policy, increasing scale, government withdrawal

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