How to cushion economic recession caused by the COVID-19 pandemic: Fiscal or monetary policies?

ABSTRACT: The outbreak of the COVID-19 pandemic has brought the global economy to a crisis: how to choose the optimal policy tools to cope with the external impacts has attracted worldwide attention. The research evaluates the effects of China's fiscal and monetary policies in promoting economic recovery by establishing a CGE model. Five representative countermeasures such as exempting value-added tax (VAT) and cutting loan rates are studied. The results indicate that: from the aspect of fiscal policies, increasing investment shows a better effect in boosting economy compared with exempting VAT and increasing medical care expenditures; however, the policy also causes price inflation (+0.45%) and crowding-out of enterprise investment (-0.03%). From the aspect of monetary policies, providing targeted

SUBMITTER: Wu Y 

PROVIDER: S-EPMC9650139 | biostudies-literature | 2022

REPOSITORIES: biostudies-literature