Deflation down the budget policy choice

Pick to: budget policy is an important tool of fiscal policy, has the stable economic and configuration resources important function. Therefore, in deflation, choose the right budget policy appears especially important and urgent. This article through to different types of budget policy function and the analysis of the defect, for deflation in China under the budget policy the selection of matting, and then in the concrete analysis of the current budget policy restricting our choice of many factors, and on the basis of our country should choose the right of the proposed budget policy, finally to how to understand the budget policy is put forward some opinions.

Keywords: deflation; Budget balance; Moderate employment balance the budget; Internal stabilizer; Camera choice

Choose what types of budget policy has always been a controversial theoretical and practical problem. Especially since 1998, in order to solve deflation, the government debt issuing scale expands again and again, the traditional annual budget balance have been broken, how to understand budget policy, our country should choose what types of budget policy problem be theoretical discussion of hot spots. And now from some of the factors cause deflation in the short term is difficult to solve to see, to issue bonds to raise money, spending as the main contents of the active fiscal policy is long-term change trend. In this context, the understanding and on budget policy discussion undoubtedly appear more important and urgent.

A, the type of budget policy and functional analysis

Budget policy is one of the important fiscal policy tools. It not only in macro economic stability and has the function of promoting the economic growth, and in the microscopic capital allocation and has the function of the income distribution. Therefore, good use of the whole economy budget policy will produce good control function. According to different classification method and budget policy will have a variety of classification. Common such as: according to the budget balance or not, divided into deficit budget, surplus budget and balance the budget (the former two can also be called the balance the budget policy). Another classification method according to the function is different, divided into annual balance the budget, function finance the budget, balancing the budget cycle and full employment balance the budget. It should be pointed out that two kinds of classification of budget policy not quite apart from, the paper by the, we can see that the first kind of classification of ideas (budget balanced) always reflected in the second division among various budget policy. But in order to study the needs of the problem, we with the second kind of classification on this paper mainly discussed. At the same time, need to explain, budget policy formulation reflects the budget the choice of economic thoughts (1). The annual balance the budget on the four budget policy and budget economic idea of corresponding relation as shown in figure:

(a) the annual balance the budget policy. That is in each of the budgetary revenues and expenditures results should be balanced budget. This budget policy in Keynes before the emergence of economics, for the classical economists that praise highly. The financial management idea is based on the government budget behavior should be "frugal" the cultural idea, think to balance the budget that have a sense of responsibility and fiscal is efficient for the government. Instead, the budget deficit will cause debt, will be wasted and prompted the government to take the capital, social, and to future generations problems, it is harmful. To realize the annual budget balance is the sound financial principles of maintenance. But as everything has its two sides, annual balance the budget also has some defects. (1) in the current progressive tax system, economic prosperity will lead to tax revenue to be automatic increase, according to balance the budget policy, fiscal expenditure must be increased, and the results will no doubt increase inflation pressure; Instead, the economic recession will lead to tax revenue to be automatic reduce, according to the policy, fiscal spending also must be reduced correspondingly, the results must be made by the economic recession. "In short, to try to keep the annual budget balance will make the economy more depression or inflation." (2) so, in the year of economic fluctuations, the government implement annual budget balance, will increase economic fluctuations, to make the economy more unstable. (2) in a particular year, the financial revenues and expenditures of equal doesn't necessarily mean that overall fiscal balance. (3) although annual balance the budget policy has some shortcomings, but not that this policy is good for nothing, in resource allocation mainly by the market manipulation of the society, the annual balance the budget policy of the government trying to excessive conduct "control", make public departments of the relative scale will not be too big, so it has a certain advantages. In the following discussion of compromise budget policy, still contain a year to balance the budget, some "control" function.

(2) functions financial budget policy. In the 1930 s, the big crisis make people realize during a recession keep annual budget balance will further deepen the recession. Then, based on the theory of Keynesian economic based on "the recession" with the function of the said financial budget arises at the historic moment. Function against annual budget balanced budget policy ideas, focus on the camera of choice fiscal measures to control the macro-economy and promote economic growth, regardless whether balancing the budget. The economist professor Michael that once pointed out: "so-called function, it is to point to budget policy abandon all traditionally regarded as' sound 'point of view, and the consequences of financial measures, or they are in social economy, as the function of the play judgment criterion of". (4) can say, and the functions of the financial budget policy is a kind of advanced budget thought, it aims to from the entire national economy national economy to consider the influence of fiscal policy. But, as the annual balance the budget too much running after a year of the budgetary revenues and expenditures absolute balance, function budget for a balanced budget for the face and to the other extreme. It also decided to the budget policy during a recession for relying too much on bonds or currency created and hard to make the government budget elastic failure and into "debt crisis" danger. In addition, the policy in the practical application, due to the difficulty of data for complete information and policy formulation and implementation effect KuangFei time delay effects, and has decided this policy in the actual operations of a great difficulty.

(3) cycle balance the budget policy. That is the financial in a whole economic cycle to balance, not on a particular fiscal year or a calendar period balance. This policy the outstanding advantages of performance in the two aspects: first, the policy accepted function of finance reasonable factor, which realize prudent fiscal policy help macro economic targets. Second, it still retains and resource allocation goal related budget control concept, inherited the year the main advantages of balancing the budget policy. But, the budget in practical application, also has many problems. First, economic fluctuation is not symmetrical. Therefore, in the boom may not equal the surplus in the period of recession deficit, balance may still exist. Second, in a cycle in a wave period, the economy may not exist serious inflation, at this time, the budget surplus has become a very reasonable stable policy. Therefore, we can say, the budget policy idealized color is strong, it's by no means easy to use in practice.

(4) full employment balance the budget policy. In view of the modern sound budget policy requires both in balance and deficit against economic cycle has the change, also requires some fiscal discipline to the realization of principle, the committee for economic development in a aimed to bring the economic cycle fiscal policy with some form of budget discipline combined budget policy. Namely the full employment balance the budget policy. Full employment budget policy that the government does not necessarily in each year or every economic cycle is keep budget balance, in before realizing full employment, budget can always is in the red. But this policy requirements in principle in the economy as a whole cycle produces in the process of a balanced budget, in order to fully offset the balance of a boom recession deficits, and, in order to pay down the debt, budget in full employment level best or "somewhat balance".

Full employment balance the budget policy the outstanding characteristic is to automatic stabilisers based. Automatic stabilisers is according to the provisions of law tax system and the spending program and carried out automatically, and the rise and fall of financial revenue and expenditure is automatic by the volatility of the economic cycle of the decision. In the economic boom, income tax, payroll taxes on income and consumption tax will be increased, and unemployed insurance pay will be dropped. Therefore, to overheating demand is a kind of "down". In contrast, in the economic depression, the three kinds of tax income tax will be reduced and unemployed insurance pay will be increased, across from the cold demand is a kind of "exciting". So the budget's inner stabilizer features, with reasonable way the cycle in action. From this point on look, full employment balance the budget policy and cycle balance the budget policy have very different, the latter advocate make full use of the camera to balance the budget choices, and the former is the main use of automatic stabilization mechanism that.

Of course some economists to full employment balance the budget policy also puts forward some questions: such as fully automatic stability mechanism is still not sure whether or not there; Automatic stabilisers energy limited, not enough to deal with significant economic fluctuation; Measure full employment index numerical always change, is difficult to determine when to balance the budget, and so on.

Second, different types of the comprehensive analysis of the budget policy

In order to get the macroscopic "stable" and "growth" and the microscopic "allocation" and "distribution" dual economic goals, the right budget policy should include the budget policy the reasonable factor.

The annual balance the budget policy, the goal is to restrict or control budget or financial, this to the main use of market allocation of resources is particularly important to the society. However, too much emphasis on the "discipline" budget function, is likely to lead to economic stability and growth in the great sacrifice. The other extreme is the policy of the financial budget policy function, the objective of which is in a market economy realize full employment and price stability, economic growth and the balance of international payments. However, the policy of the most serious defects is ignored "fiscal discipline", that is not affected by the budget "control", department of resource allocation problems between on the secondary position. The above two kinds of policies are all headed to the extreme, reasonable budget policy should include "control" and "macroeconomic goals" two factors, so, later period balance the budget policy and full employment balance the budget policy including relevant realize resource allocation budget control and improvement of economic operation of the overall budget behavior of this two respects content. But cycle for a balanced budget policy in practical application have many restraining factors, and make the feasibility to sell at a discount greatly. Economists more agree is full employment balance the budget. This budget policy requirements in economic appear "closer to the optimum" the employment and price, achieve balanced budget. Should say, this is a good compromise. But the budget policy put too much emphasis on "automatic stabilisers" importance, and ignore the camera of choice financial measures. This is a perfect budget policy is incomplete. But overall, full employment balance the budget is a relatively ideal budget policy.

Three, effect on our country's budget policy choice in the factor analysis

Deflation in China should choose what types of budget policy? Based on the current macroeconomic judgement of the situation, as well as to the financial situation and the grasp of the financial system, we tend to choose a prudent reverse adjust economy budget policy, we will be known as "moderate employment balance the budget". This budget policy to overcome deflation, promote economic growth and the realization moderate employment as the goal, and pay attention to balance the budget. Specific for the following reasons:

(a) the current macroeconomic situation in our country the constraints of the budget policy decision the target

1. The pressure of deflation has not been eliminated. Positive fiscal policy, more than two years, to stimulate domestic demand, helped drive economic growth. But at the same time, we should also see, at present the economy overall operation is still not optimistic. Fixed asset investment in the low post always Pai Huai, financial institutions loan and deposit growth continues to decline, between enterprise and the debt continues to increase, the retail price index for 25 months down, production material price index has lasted 43 months down. The index shows that the macro economy is still in the deflation. From the result in the deflation of some factors is not short-term can solve to see, in the future a long time, stimulate demand, promoting the economic growth will is macro economic decision-making of the great tasks. Therefore, in this budget policy must be something on one hand.

2. Company worker the serious problem of unemployment of come off sentry duty. And deflation, accompanied by another serious social and economic problems is the number of laid-off and unemployed workers there. It is estimated that our country at present the town unemployment reached 5 ~ 8%, about 1200 ~ 14 million town Labour force was unemployment (LiuGuoGuang, 1997). By the end of 1997, the national state-owned enterprise shunt laid-off workers to 12.74 million, accounting for 12% of the total number of state-owned company worker. It is estimated that by 2000, every year will still have 300 ~ 4 million laid-off workers (ZhangZhuoYuan, 1999). If we consider all sorts of recessive unemployment, rural surplus labor and a large population base factors, can see, China's huge unemployment line are forming. Unemployment for social stability of a serious threat also rising inflation and approaching. Although China's unemployment is due to the readjustment of the economic structure, enterprise reform and deflation and so on many kinds of factors, and the western countries are not the same reason for unemployment, but in pursuit of the maximum employment and promote the goal of all countries on the choice is undoubtedly have in common (and, of course, there are still some differences between Chinese and western countries, the western countries are in pursuit of full employment, and the situation of our country is decided in the employment goals the choice, we tend to moderate employment.) . So, we think, eliminate unemployment, promote moderate employment should become the budget policy and important points.

(2) the influence of financial receipts and expenditures to the implementation of the policy of budget way choice

1. ZengZhi pressure. In the reform, the development and the system transition stage, abnormal pressure expenditure of our country is strong. First is support state-owned enterprises reform spending. From the support for the technology progress and industrial upgrading state-owned enterprises loan discount of spending, to the depletion of the efficiency, and again obtain employment and social security spending, and then to state-owned enterprises implement "the debt-to-equity" financial guarantee pressure (spending), etc. Can foresee, with the support of the measures in place gradually, financial expenditure will may be present the growth by leaps and bounds.