Research of Dynamic Effect of Monetary Policy and Fiscal Policy on SVAR Model

Monetary policy and fiscal policy are the two fundamental policies to control the macroeconomic in the nation.By adopting Structural Vector Autoregression Model(SVAR) and introducing five variables which apart reflect production,rate of inflation,monetary policy,fiscal revenue,fiscal expenditure,simultaneous equations are set up to analyze the changes of transmission mechanism of monetary policy and fiscal policy.The result shows that from 2002,the effect of monetary policy on regulating the macroeconomic operation is strongger than the effect of fiscal policy.This two policies will make an impact on the Domestic demand to a certain degree and comparatively speaking,the monetary policy will affect the price fluctuates more obviously.At the same time,enhancing the fiscal expenditure will produce a positive influence to the money supply.