The cause, features and effects of current policy mix of opposing fiscal and monetary policies

Wei Liu ()
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Wei Liu: Beijing University

China Finance and Economic Review, 2014, vol. 2, issue 1, 1-12

Abstract: Abstract Currently, China's expansionary fiscal policy and tight monetary policy have formed an opposing policy mix. This is due to the imbalanced macro-economy, which suffers from the pressures of inflation and slow growth. In response to economic changes, China adjusted its monetary policy as the real economy has a weak demand for money. In its reactions to the financial crisis, China adopted a series of policies different from those implemented in European and American countries. For this mix of opposing fiscal and monetary policies to be effective, three conditions should be met: the adjustment of direction should fit the real imbalanced economic situation, financing and investing mechanisms should be market-based, interest rates and exchange rates should gradually become market-determined.

Keywords: Macro-control; Fiscal policy; Monetary policy; Mix of easing and tight policy (search for similar items in EconPapers)
Date: 2014
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DOI: 10.1186/2196-5633-2-1

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