Discover and read the best of Twitter Threads about #economicstimuluspackage
Most recents (3)
THREAD: A recent paper by Yu Yongding and Zhang Yi on monetary financing in China:
new.cf40.org.cn/uploads/202006… 1/5
#monetarypolicy #fiscalpolicy #COVID19 #economicstimuluspackage
new.cf40.org.cn/uploads/202006… 1/5
#monetarypolicy #fiscalpolicy #COVID19 #economicstimuluspackage
In this paper, the authors first analyzed the impacts of two approaches to fiscal deficit financing (issuing government bonds and monetary financing), then further evaluated the possibility of adopting these approaches in China and their pros and cons. 2/5
They suggest China take the following order when choosing financing approaches:1, issue government bonds to non-banking financial institutions (general public); 2, issue government bonds to commercial banks; 3, launch the Chinese version of QE; 4, monetary financing. 3/5
THREAD: A recent interview with Xiao Gang and Liu Yuanchun on China’s 2020 growth outlook, employment, fiscal&monetary policies, small&medium-sized banks’ challenge in supporting businesses etc: new.cf40.org.cn/uploads/202006… #covid19 #economicstimuluspackage
While there have been some controversies over whether China’s calling for “developing new monetary policy instruments that can directly stimulate the real economy” is simply a temporary move, Xiao believes these arrangements are extensions of the function of monetary policy …
… and represent a step forward for monetary policy theory, and therefore not just temporary measures. Part of the significance of this call in the 2020 Government Work Report is that it will help improve the transmission mechanism of the monetary policy.
Allowing monetization of fiscal deficits may lead to lack of discipline in government behavior new.cf40.org.cn/uploads/202005… #COVID__19 #deficit #economicstimuluspackage
Monetization of fiscal deficits has prerequisites which cannot be ignored: One is that monetary policy is caught in liquidity trap, when extremely loose monetary policy is impossible so expansionary fiscal policy becomes the last resort for implementing various rescue measures.
Second, there is no room left for fiscal expansion. A large-scale deficit must be adopted, and it is hardly possible to expand government deficits through normal market sales.
