Using data after 1998, we have established a small quarterly macro-economic model for China including five modules as aggregate demand, aggregate supply, price, finance and money, which embodies in 47 equations. The main empirical result shows this model has a good theory explanation for Chinese economy. Based on this, we also simulate the affect that U.S. economy decline, deposit and loan interest rates down-regulation against major domestic economic variables. The policy implication shows that under the current context of U.S. economy decline, national policy should focus on stimulating consumption and optimizing investment, which in line with the basic points of current policy.
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