Analysis on the effectiveness of China’s macroeconomic policy based on the modified Mundell-Fleming model during the post-financial crisis period
Bi Jianxin1, 2, Lei Lianghai2
COMPUTER MODELLING & NEW TECHNOLOGIES 2014 18(2) 240-249
1 Faculty of Management, University of Shanghai for Science and Technology, 516 Jun Gong Road, Shanghai, China
2 Faculty of Computer and Information, Zhejiang Wanli University, No.8, South Qian Hu Road Ningbo, Zhejiang, China
This paper proposed the hypotheses of Mundell-Fleming model applicable to current Chinese economic environment, modified the traditional Mundell-Fleming model and analysed the effectiveness of fiscal and monetary policies under different exchange rate systems. Under a fixed exchange rate system, the monetary policy causes economic instability and aggravates economic inequality, thus increasing the difficulty in policy intervention, in which case the fiscal policy has significant results only with the positive coordination of monetary policy; under a floating exchange rate system, the fiscal policy has remarkable effects and the monetary policy has effects which are not uncertain. Finally, the paper analyzes the effectiveness of China's macroeconomic policy using the modified Mundell-Fleming model and proposes the orientation for China's macroeconomic policy in post-crisis period.