Let's MPC the economy: stabilising the economy using more dynamic regulation

摘要

This work proposes a method for stabilising a nation's macro economy. The idea is to use more dynamic regulation. At present, only the Central Bank's short-run interest rate is used as a dynamic variable in the government monetary policy for stabilising the macro economy. The author suggests to make the value added tax (VAT) as a new dynamic regulation variable. The VAT can be adjusted monthly or quarterly coordinated with the Central Bank's interest rate by a new independent agency called Central Tax Bureau (or by the Central Bank). The advantages of the method will be discussed; the implementation of the method will be outlined. Control theoretical analysis and computer simulation will be used to demonstrate the effectiveness of the method.