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Regulation or Deregulation——Research on Market Entry Policy Based on the Background of Deleveraging

【Authors】
LV Wei, GAO Shuaixiong & ZHOU Chao
【WorkUnit】
LV Wei(College of Economics & Social Development, Dongbei University of
Finance and Economics, 116025)
GAO Shuaixiong(School of Public Finance and Taxation, Dongbei University of
Finance and Economics, 116025)
ZHOU Chao (Zhangye Central Sub-branch, The People's Bank of China, 734000)
【Abstract】

Market entry may lead to overcapacity. Will it raise the leverage rate of the industry? In our country, the industrial policy is the main tool for the government to regulate and control the market entry, and how does the policy affect the leverage rate of the industry? Based on the perspective of market entry, this paper analyzes the influence mechanism of market entry policy to the leverage rate of upstream industry by DSGE. This paper finds that deregulation of market entry will raise the leverage rate of upstream industry. Moreover, if the regulation became stricter in the early stage, the leverage rate of upstream industry would be higher when the government releases regulation on market entry. However, if the government does not deregulate market entry, the social welfare will be damaged. If the government deregulates market entry, it has to face the problem of high leverage rate. In the face of such a dilemma, the government needs to seize the opportunity to reduce the cost of decision-making when it comes to deregulation

JEL:C61, E27, E61

【KeyWords】
Industrial policy, Market entry, Deleveraging, DSGE