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The Dynamic Relationship between China’s Economic Cycle, Government Debt, and Economic Policy

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Listed:
  • Yifu Yang

    (School of Economics, Shanghai University, Shanghai 200444, China)

  • Sheng Zhang

    (School of Environment, Tsinghua University, Beijing 100190, China)

  • Nannan Zhang

    (School of Marxism, Party School of the Central Committee of C.P.C, Beijing 100091, China)

  • Zuhui Wen

    (School of Environment & Natural Resources, Renmin University of China, Beijing 100872, China)

  • Qihao Zhang

    (School of Environment & Natural Resources, Renmin University of China, Beijing 100872, China)

  • Meng Xu

    (Department of Mathematics, School of Science, Beijing Jiaotong University, Beijing 100044, China)

  • Yingfan Zhang

    (People’s Court of Fengtai District, Beijing 100161, China)

  • Muchuan Niu

    (School of Environment & Natural Resources, Renmin University of China, Beijing 100872, China)

Abstract

Economic growth is an integral part of the Sustainable Development Goals (SDGs), especially SDG 8. We combine 10 economic constraints and build a five-variable (structural vector autoregressive) SVAR model based on China’s time series data of 1978–2017. The empirical results show: (1) The Chinese government adopted different economic policies at different stages of reform and opening up; (2) From the impulse response results, China’s excessively high government debt ratio has begun to inhibit economic growth; (3) In terms of policy selection and coordination, the Chinese government mostly adopts a “discretion” adjustment strategy. In most cases, the fiscal and monetary policies were in the same direction, and the “double expansionary” and “double contractionary” policy coordination may become mainstream; (4) The results of variance decomposition showed that both fiscal and monetary policies can effectively regulate economic growth at the present stage, and the contribution rates of exogenous shocks to the prediction variance of economic growth rate were about 25%.

Suggested Citation

  • Yifu Yang & Sheng Zhang & Nannan Zhang & Zuhui Wen & Qihao Zhang & Meng Xu & Yingfan Zhang & Muchuan Niu, 2022. "The Dynamic Relationship between China’s Economic Cycle, Government Debt, and Economic Policy," Sustainability, MDPI, vol. 14(2), pages 1-14, January.
    • Handle: RePEc:gam:jsusta:v:14:y:2022:i:2:p:1029-:d:726733
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    References listed on IDEAS

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    Cited by:

    1. Ling Tian & Haisong Dong, 2023. "Study on the Dynamic Relationship between Chinese Residents’ Individual Characteristics and Commercial Health Insurance Demand," IJERPH, MDPI, vol. 20(6), pages 1-20, March.
    2. Jie Pang & Juan Yin & Guangchang Lu & Shimei Li, 2023. "Supply and Demand Changes, Pig Epidemic Shocks, and Pork Price Fluctuations: An Empirical Study Based on an SVAR Model," Sustainability, MDPI, vol. 15(17), pages 1-16, August.

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