Analysis on the Steady Growth Effect of China’s Fiscal Policy from a Dynamic Perspective

Huiqin Li, Shuai Guan and Yongfu Liu
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Huiqin Li: School of Public Finance and Administration, Harbin University of Commerce, Harbin 150028, China
Shuai Guan: School of Economics and Statistics, Guangzhou University, Guangzhou 510006, China
Yongfu Liu: School of Economics and Statistics, Guangzhou University, Guangzhou 510006, China

Sustainability, 2022, vol. 14, issue 13, 1-15

Abstract: Under the goal of a “new development pattern”, it is of great practical significance to accurately identify the economic growth effect of fiscal and tax policies. This paper constructs a TVP-FAVAR model to measure the economic effects of China’s fiscal and tax policies at the aggregate and structural levels. The results show that the reduction in total tax has a positive effect on real variables such as output and consumption; especially at the present stage, the promotion effect of total tax reduction on economic growth is relatively strong, but the stimulation effect on price is relatively weak. Further, the tax structure in which the ratio of direct tax to total tax increases and the ratio of indirect tax to total tax decreases is more conducive to the increase in output and consumption, and will not strongly stimulate the rise of price level. Therefore, at this stage, China should continue to vigorously implement the tax reduction policy and ensure the continuity of the tax reduction policy. At the same time, we should continue to optimize the tax structure and give better play to the regulatory role of fiscal and tax policies in income redistribution, so as to achieve the goal that fiscal and tax policies help build a “new development pattern” and promote high-quality economic development.

Keywords: sustainable growth; fiscal policy; nonlinear correlation (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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