An Analysis of the Functional Effectiveness of the Automatic Stabilisers of Fiscal Policy in China

Huachun Wang; Lu Zhao; Xuan Zhang

doi:doi:10.11648/j.ijefm.20150305.35

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An Analysis of the Functional Effectiveness of the Automatic Stabilisers of Fiscal Policy in China

Huachun Wang, Lu Zhao, Xuan Zhang

Published in International Journal of Economics, Finance and Management Sciences (Volume 3, Issue 5)

Received: 12 October 2015 Accepted: 26 October 2015 Published: 13 November 2015

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Abstract

Granger causality Wald test and impulse response analysis were employed to test the functional effectiveness of automatic stabilisers of fiscal policy in China, which revealed that the automatic stabilisers exhibited asymmetries in fiscal revenues and expenditures. In particular, automatic fiscal stabilisers reduced economic fluctuations in fiscal revenue during economic booming and recession. With respect to fiscal expenditures, increases and decreases in central fiscal expenditures occurred during times of economic decline and growth, respectively, and thereby exerted countercyclical smoothing effects on the macro-economy; by contrast, increases and decreases in local fiscal expenditures occurred in accordance with economic developments, amplifying economic expansions or recessions. These differences in spending patterns between central and local governments caused malfunctions in automatic stabilisers that were related to fiscal expenditures. Given the premise that the relationship between central and local fiscal approaches should be rationalised, the fiscal spending policies should focus on investments in the livelihood and improvements in the autonomy of budgetary decisions by local governments.

Published in	International Journal of Economics, Finance and Management Sciences (Volume 3, Issue 5)
DOI	10.11648/j.ijefm.20150305.35
Page(s)	616-622
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2015. Published by Science Publishing Group

Keywords

Fiscal Policy, Automatic Stabilisers, Asymmetry

References

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APA Style

Huachun Wang, Lu Zhao, Xuan Zhang. (2015). An Analysis of the Functional Effectiveness of the Automatic Stabilisers of Fiscal Policy in China. International Journal of Economics, Finance and Management Sciences, 3(5), 616-622. https://doi.org/10.11648/j.ijefm.20150305.35

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ACS Style

Huachun Wang; Lu Zhao; Xuan Zhang. An Analysis of the Functional Effectiveness of the Automatic Stabilisers of Fiscal Policy in China. Int. J. Econ. Finance Manag. Sci. 2015, 3(5), 616-622. doi: 10.11648/j.ijefm.20150305.35

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AMA Style

Huachun Wang, Lu Zhao, Xuan Zhang. An Analysis of the Functional Effectiveness of the Automatic Stabilisers of Fiscal Policy in China. Int J Econ Finance Manag Sci. 2015;3(5):616-622. doi: 10.11648/j.ijefm.20150305.35

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@article{10.11648/j.ijefm.20150305.35,
  author = {Huachun Wang and Lu Zhao and Xuan Zhang},
  title = {An Analysis of the Functional Effectiveness of the Automatic Stabilisers of Fiscal Policy in China},
  journal = {International Journal of Economics, Finance and Management Sciences},
  volume = {3},
  number = {5},
  pages = {616-622},
  doi = {10.11648/j.ijefm.20150305.35},
  url = {https://doi.org/10.11648/j.ijefm.20150305.35},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijefm.20150305.35},
  abstract = {Granger causality Wald test and impulse response analysis were employed to test the functional effectiveness of automatic stabilisers of fiscal policy in China, which revealed that the automatic stabilisers exhibited asymmetries in fiscal revenues and expenditures. In particular, automatic fiscal stabilisers reduced economic fluctuations in fiscal revenue during economic booming and recession. With respect to fiscal expenditures, increases and decreases in central fiscal expenditures occurred during times of economic decline and growth, respectively, and thereby exerted countercyclical smoothing effects on the macro-economy; by contrast, increases and decreases in local fiscal expenditures occurred in accordance with economic developments, amplifying economic expansions or recessions. These differences in spending patterns between central and local governments caused malfunctions in automatic stabilisers that were related to fiscal expenditures. Given the premise that the relationship between central and local fiscal approaches should be rationalised, the fiscal spending policies should focus on investments in the livelihood and improvements in the autonomy of budgetary decisions by local governments.},
 year = {2015}
}

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TY  - JOUR
T1  - An Analysis of the Functional Effectiveness of the Automatic Stabilisers of Fiscal Policy in China
AU  - Huachun Wang
AU  - Lu Zhao
AU  - Xuan Zhang
Y1  - 2015/11/13
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DO  - 10.11648/j.ijefm.20150305.35
T2  - International Journal of Economics, Finance and Management Sciences
JF  - International Journal of Economics, Finance and Management Sciences
JO  - International Journal of Economics, Finance and Management Sciences
SP  - 616
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PB  - Science Publishing Group
SN  - 2326-9561
UR  - https://doi.org/10.11648/j.ijefm.20150305.35
AB  - Granger causality Wald test and impulse response analysis were employed to test the functional effectiveness of automatic stabilisers of fiscal policy in China, which revealed that the automatic stabilisers exhibited asymmetries in fiscal revenues and expenditures. In particular, automatic fiscal stabilisers reduced economic fluctuations in fiscal revenue during economic booming and recession. With respect to fiscal expenditures, increases and decreases in central fiscal expenditures occurred during times of economic decline and growth, respectively, and thereby exerted countercyclical smoothing effects on the macro-economy; by contrast, increases and decreases in local fiscal expenditures occurred in accordance with economic developments, amplifying economic expansions or recessions. These differences in spending patterns between central and local governments caused malfunctions in automatic stabilisers that were related to fiscal expenditures. Given the premise that the relationship between central and local fiscal approaches should be rationalised, the fiscal spending policies should focus on investments in the livelihood and improvements in the autonomy of budgetary decisions by local governments.
VL  - 3
IS  - 5
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Author Information

Huachun Wang

School of Government, Beijing Normal University, Beijing, China
Lu Zhao

School of Government, Beijing Normal University, Beijing, China
Xuan Zhang

School of Government, Beijing Normal University, Beijing, China

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APA Style

Huachun Wang, Lu Zhao, Xuan Zhang. (2015). An Analysis of the Functional Effectiveness of the Automatic Stabilisers of Fiscal Policy in China. International Journal of Economics, Finance and Management Sciences, 3(5), 616-622. https://doi.org/10.11648/j.ijefm.20150305.35

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ACS Style

Huachun Wang; Lu Zhao; Xuan Zhang. An Analysis of the Functional Effectiveness of the Automatic Stabilisers of Fiscal Policy in China. Int. J. Econ. Finance Manag. Sci. 2015, 3(5), 616-622. doi: 10.11648/j.ijefm.20150305.35

Copy | Download

AMA Style

Huachun Wang, Lu Zhao, Xuan Zhang. An Analysis of the Functional Effectiveness of the Automatic Stabilisers of Fiscal Policy in China. Int J Econ Finance Manag Sci. 2015;3(5):616-622. doi: 10.11648/j.ijefm.20150305.35

Copy | Download

@article{10.11648/j.ijefm.20150305.35,
  author = {Huachun Wang and Lu Zhao and Xuan Zhang},
  title = {An Analysis of the Functional Effectiveness of the Automatic Stabilisers of Fiscal Policy in China},
  journal = {International Journal of Economics, Finance and Management Sciences},
  volume = {3},
  number = {5},
  pages = {616-622},
  doi = {10.11648/j.ijefm.20150305.35},
  url = {https://doi.org/10.11648/j.ijefm.20150305.35},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijefm.20150305.35},
  abstract = {Granger causality Wald test and impulse response analysis were employed to test the functional effectiveness of automatic stabilisers of fiscal policy in China, which revealed that the automatic stabilisers exhibited asymmetries in fiscal revenues and expenditures. In particular, automatic fiscal stabilisers reduced economic fluctuations in fiscal revenue during economic booming and recession. With respect to fiscal expenditures, increases and decreases in central fiscal expenditures occurred during times of economic decline and growth, respectively, and thereby exerted countercyclical smoothing effects on the macro-economy; by contrast, increases and decreases in local fiscal expenditures occurred in accordance with economic developments, amplifying economic expansions or recessions. These differences in spending patterns between central and local governments caused malfunctions in automatic stabilisers that were related to fiscal expenditures. Given the premise that the relationship between central and local fiscal approaches should be rationalised, the fiscal spending policies should focus on investments in the livelihood and improvements in the autonomy of budgetary decisions by local governments.},
 year = {2015}
}

Copy | Download

TY  - JOUR
T1  - An Analysis of the Functional Effectiveness of the Automatic Stabilisers of Fiscal Policy in China
AU  - Huachun Wang
AU  - Lu Zhao
AU  - Xuan Zhang
Y1  - 2015/11/13
PY  - 2015
N1  - https://doi.org/10.11648/j.ijefm.20150305.35
DO  - 10.11648/j.ijefm.20150305.35
T2  - International Journal of Economics, Finance and Management Sciences
JF  - International Journal of Economics, Finance and Management Sciences
JO  - International Journal of Economics, Finance and Management Sciences
SP  - 616
EP  - 622
PB  - Science Publishing Group
SN  - 2326-9561
UR  - https://doi.org/10.11648/j.ijefm.20150305.35
AB  - Granger causality Wald test and impulse response analysis were employed to test the functional effectiveness of automatic stabilisers of fiscal policy in China, which revealed that the automatic stabilisers exhibited asymmetries in fiscal revenues and expenditures. In particular, automatic fiscal stabilisers reduced economic fluctuations in fiscal revenue during economic booming and recession. With respect to fiscal expenditures, increases and decreases in central fiscal expenditures occurred during times of economic decline and growth, respectively, and thereby exerted countercyclical smoothing effects on the macro-economy; by contrast, increases and decreases in local fiscal expenditures occurred in accordance with economic developments, amplifying economic expansions or recessions. These differences in spending patterns between central and local governments caused malfunctions in automatic stabilisers that were related to fiscal expenditures. Given the premise that the relationship between central and local fiscal approaches should be rationalised, the fiscal spending policies should focus on investments in the livelihood and improvements in the autonomy of budgetary decisions by local governments.
VL  - 3
IS  - 5
ER  -

Copy | Download