Local Government Borrowing’s Expansionary Monetary Effect and Its Policy Synergy
Abstract: All governments face increasingly frequent issues arising from aggregate supply and demand against currency circulation and financial stability, and public finance and banking authorities employ a variety of policy instruments to keep the economy stable and coordinated. How to avoid policy conflicts and maximize effectiveness in policy portfolio of local government borrowing, which is taken as a major macro-control instrument, is a subject that needs in-depth study. This paper probes into local government borrowing’s monetary effect and transmission mechanism and its best synergistic model with monetary policy by the construction of a NK-DSGE model covering financial frictions, multi-period bonds and borrowing rules. The findings are as follows. (1) The shocks of one-percent local government borrowing (bond duration=5 years) push up the money multiplier by 0.39% to produce expansionary monetary effect, and the longer the bond duration, the greater the effect. (2) In the context of physical and financial shocks, monetary policy adopts a moderately tight reverse synergy with local government borrowing, effectively restraining its expansionary monetary effect for better economic stability and recovery. (3) For bonds with longer maturities, raising the risk sensitivity of local government borrowing rules benefits the improvement of welfare.
- Location
-
Deutsche Nationalbibliothek Frankfurt am Main
- Extent
-
Online-Ressource
- Language
-
Englisch
- Bibliographic citation
-
Local Government Borrowing’s Expansionary Monetary Effect and Its Policy Synergy ; volume:11 ; number:3 ; year:2023 ; pages:46-65 ; extent:20
China finance and economic review ; 11, Heft 3 (2023), 46-65 (gesamt 20)
- Creator
-
Li, Na
Liu, Rong
- DOI
-
10.1515/cfer-2022-0016
- URN
-
urn:nbn:de:101:1-2023021113022320831650
- Rights
-
Open Access; Der Zugriff auf das Objekt ist unbeschränkt möglich.
- Last update
-
14.08.2025, 10:44 AM CEST
Data provider
Deutsche Nationalbibliothek. If you have any questions about the object, please contact the data provider.
Associated
- Li, Na
- Liu, Rong
Other Objects (12)
Deflation in China (1997 - 2000)
Neuroradiological findings and molecular markers as predictors for secondary brain injury and outcome after intracerebral hemorrhage (ICH)
Analysis of a stochastic predator–prey population model with Allee effect and jumps
HemeBIND: a novel method for heme binding residue prediction by combining structural and sequence information
Neuroradiological findings and molecular markers as predictors for secondary brain injury and outcome after intracerebral hemorrhage
Oracally efficient two-step estimation of generalized additive model
Global dynamics of a delayed latent virus model with both virus-to-cell and cell-to-cell transmissions and humoral immunity
Role of circRMRP and circRPL27 in chronic obstructive pulmonary disease
Privacy protection of communication networks using fully homomorphic encryption based on network slicing and attributes
Dual temporal gated multi-graph convolution network for taxi demand prediction
Organic Ligand‐Free Scalable Dual‐Band Electrochromic Smart Windows
Optimal boundary control problems for a hierarchical age-structured two-species model
Deflation in China (1997 - 2000)
Neuroradiological findings and molecular markers as predictors for secondary brain injury and outcome after intracerebral hemorrhage (ICH)
Analysis of a stochastic predator–prey population model with Allee effect and jumps
HemeBIND: a novel method for heme binding residue prediction by combining structural and sequence information
Neuroradiological findings and molecular markers as predictors for secondary brain injury and outcome after intracerebral hemorrhage
Oracally efficient two-step estimation of generalized additive model
Global dynamics of a delayed latent virus model with both virus-to-cell and cell-to-cell transmissions and humoral immunity
Role of circRMRP and circRPL27 in chronic obstructive pulmonary disease
Privacy protection of communication networks using fully homomorphic encryption based on network slicing and attributes
Dual temporal gated multi-graph convolution network for taxi demand prediction
Organic Ligand‐Free Scalable Dual‐Band Electrochromic Smart Windows
Optimal boundary control problems for a hierarchical age-structured two-species model
Deflation in China (1997 - 2000)
Neuroradiological findings and molecular markers as predictors for secondary brain injury and outcome after intracerebral hemorrhage (ICH)
Analysis of a stochastic predator–prey population model with Allee effect and jumps
HemeBIND: a novel method for heme binding residue prediction by combining structural and sequence information
Neuroradiological findings and molecular markers as predictors for secondary brain injury and outcome after intracerebral hemorrhage
Oracally efficient two-step estimation of generalized additive model
Global dynamics of a delayed latent virus model with both virus-to-cell and cell-to-cell transmissions and humoral immunity
Role of circRMRP and circRPL27 in chronic obstructive pulmonary disease
Privacy protection of communication networks using fully homomorphic encryption based on network slicing and attributes
Dual temporal gated multi-graph convolution network for taxi demand prediction
Organic Ligand‐Free Scalable Dual‐Band Electrochromic Smart Windows