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Macrostabilisation Policy in Mainland China’s Open Economy

Journal of Economic Studies

ISSN: 0144-3585

Article publication date: 1 January 1991

Abstract

A general equilibrium model for mainland China′s open economy is formulated and used to examine the effect of stabilisation policy on the internal and external balances. An expansionary monetary or fiscal policy in particular through its effect on consumption and labour supply raises aggregate supply. However, the effect on the external balance is ambiguous. The issue of trade‐offs between internal and external balances does arise; if the effect on production is greater than that on consumption, the trade balance will not be ameliorated.

Keywords

Citation

Chen, C. (1991), "Macrostabilisation Policy in Mainland China’s Open Economy", Journal of Economic Studies, Vol. 18 No. 1. https://doi.org/10.1108/01443589110006279

Publisher

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MCB UP Ltd

Copyright © 1991, MCB UP Limited