Fiscal Policy in Public Health Crisis (COVID-19): An Analysis Based on IS-LM Model in China
DOI:
https://doi.org/10.54097/5e20t107Keywords:
COVID-19; China; IS-LM model; Fiscal policyAbstract
The Chinese economy was severely impacted during the Novel Coronavirus pandemic (COVID-19). This paper will investigate the impact of the epidemic on different fields of the economy, such as consumption and investment, and the role of positive fiscal policy in the recovery of the national economy from the perspective of the government. In addition, this paper will then use the IS-LM model as the analytical method to explore the effect of fiscal policy through the movement of the curve. According to the model, in the face of the epidemic, the Chinese government has boosted economic growth through a series of fiscal policies such as increasing government subsidies, reducing taxes, and issuing consumption vouchers. Moreover, as demonstrated in the literature by different scholars, under the current condition of China, the effect of fiscal policy will be much better than that of monetary policy, and therefore it is the most effective way to address short-term shocks.
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