Research on market transmission mechanism of steel industry capacity allocation--An analysis of the policy implications for promoting structural reform of supply side

Research on market transmission mechanism of steel industry capacity allocation--An analysis of the policy implications for promoting structural reform of supply side


Author:Sun Wei, Zhang Zijian  Journal:[Working Paper]  Date:2017(3)

Keywords Market Transmission Mechanism; Capacity Allocation; Fiscal Expenditure; Asymmetric Effect

Abstract

In this paper we divide two market areas by construct MS-VAR model to explore the relationship between market transmission mechanism and fiscal expenditure policy effect on the steel industry capacity allocation under different market conditions. The results show that the market transmission mechanism and fiscal expenditure has different effects in different market conditions, the demand effect of the industry boom on investment and capacity allocation is stronger than that of the industry recession. And no matter when the role of fiscal expenditure guide allocation of production capacity is basically the same. This paper reveals that the asymmetry of market transmission mechanism under different market conditions is the main reason for the formation of iron and steel industry overcapacity and difficult to control, which leads to the imbalance of supply and demand, and provide a reference that how the government governance structure of supply and demand changes. It has a good guiding

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