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Grey Relational Analysis of Factors Affecting Scale of National Debt

Author: ZhongLinZuo From: www.yourpaper.net Posted: 2009-03-30 15:58:26 Read:
[Abstract] This article by the gray correlation analysis methods to calculate the amount of the issuance of treasury bonds and GDP GDP, balance of savings deposits of urban and rural residents, fiscal revenue, fiscal expenditure, the budget fixed assets investment, government bonds of debt service to the gray relative associate degree, then associate degree sort of important factors that affect the bond issue size, the last of China's government bond solvency as measured by these factors, the national debt should be a more systematic analysis of debt capacity, the national debt dependence.
[Keywords] government bonds; Grey Relational Analysis; national debt solvency; government bonds should the debt capacity; national debt dependence

First, the Grey Relational Analysis Method

Gray correlation analysis to quantitatively compare or described system or between the system each factor Q, the relative change over time in the development process, i.e. the geometry of the curve analysis of time series, and use them to change size, direction and speed, etc. closeness to measure the size of the correlation between them. The two comparative sequence changes in trend is basically the same, or similar, a higher degree of synchronization changes, namely that both the degree of association; contrary, both associated with a lesser degree. This for the scale of the size of the correlation between the measurement system or factors change over time between the called associative degrees. Only clarify this relationship to the system, a more thorough understanding of, and distinguish between what is the dominant factor, and what constraints; What are the advantages, what is the disadvantage. To lay the foundation for system analysis, forecasting, decision-making, evaluation, planning, and development of strategic research. Gray correlation analysis of the basic method is as follows:
Step 1: Determine the parent sequence x 0 with the promoter sequence X i .
Step 2: The raw data preprocessing. Each index different from the original data dimensionless quantity differentials disparity eliminate the dimensionless, merge data level, the original data, it has a comparable, first the original data preprocessing. In this paper Initializes transformation: the x ' ij = x ij / X il

Step 7: row associated sequence. To accurately evaluate and rationalize the respective sequence of the base sequence associated correlation degree been sorted, called the associated sequence. To compare with each sub-sequence of the same parent sequence, what big or small, you can clear and rationalize their sequence of "primary and secondary" relationship with the parent sequence.

Second, China's treasury bond issue amount
gray relational analysis of the influencing factors

1. Determine the the parent sequence x 0 and sub-sequence x i , i.e. the determination of system factors. There are many factors that affect a country's debt issue size, the the preliminarily selected data variables include the amount of the issuance of treasury bonds (x 0 ) as the base sequence, the gross domestic product (GDP) GDP (x ), the balance of savings deposits of urban and rural residents (x 2 ), financial income (X 3 ), the financial spending (X 4 ) the budget fixed asset investment (x the 5 ), the bond debt service (x 6 ), then balance of government bonds (X 7 ) respectively As a promoter sequence. Select system variables above is based on the traditional impact study on the scale of the issuance of treasury bonds considerations.
First, GDP (X 1 ). The size of a country's national debt issue is subject to the level of economic development of the country, the larger a country's economy, the higher the level of development, the scale and the greater the potential issuance of treasury bonds.
Second, the savings deposits of residents (x 2 ). Residents' disposable income for the two projects, namely savings and consumption. The balance of government bonds and the ratio of savings deposits of residents that may be the larger residents should debt rate, this indicator reflects residents should debt capacity, should be higher the debt ratio, the issuance of treasury bonds.
Third, the financial situation of the (x 3 x 4 ). One of the main reasons of the issuance of treasury bonds is to make up the deficit, so analysis of the issue size of the national debt, we must consider China's fiscal revenue and fiscal expenditure.
Fourth, the budget, the scale of investment in fixed assets (x 5 ). A country's fixed assets investment scale will be a direct impact on the demand for capital, and fiscal revenue comes mainly from government investment can insufficient financing through the issue of treasury bonds, government investment gap is generally through the issuance of government bonds to make up for.
Fifth, the bond debt service (x 6 ). The use of government bonds as well as repayment of maturing debt principal and interest, with the national debt issue size is increasing year by year, the amount of the national debt principal and interest must be repaid annually also increased year by year, this figure has reached 28 7.658 billion yuan in 2003. Therefore, the bond debt service is one of the important factors to consider bond issue size.
Sixth, the balance of government bonds (x 7 ). The total amount of the national debt of a country can bear is limited, so the balance of government bonds is an important factor in the analysis of national debt scale.
China from the 1981 issue of treasury bonds, the size of the national debt is the rapid expansion of nearly 1.26 trillion yuan treasury bonds, cumulative issue. During this period, the expansion of the national debt scale can be subdivided into four stages. The first stage in 1994, due to lower fiscal deficit to make up the deficit to the central bank overdrafts, therefore Treasuries scale slower growth. Issuance of treasury bonds in 1981 amounted to 4.866 billion yuan, more than 20 billion yuan in 1990, not yet. The second phase of 1994-1995. Since the introduction of the 1994 Budget Act, the provisions of the fiscal deficit not to the central bank overdraft, making the budget deficit can only rely on the issuance of government bonds to compensate, the size of the national debt has been rapid development. Of bonds for the first time exceeded 100 billion yuan in 1994. The third stage is from 1996-1997. Countries moderately tight fiscal policy, the central government deficit in 1996 than in 1995 decreased by 50 million, reduced by 50 million in 1997 compared with 1996, the expansion of the national debt scale is mainly due to the bond debt service, and their own liquidity caused. The fourth stage after 1998, due to the implementation of the proactive fiscal policy, the new central government deficit in 1998 than in 1997 more than 40 billion yuan, 96 billion yuan, the planned deficit of 150.3 billion yuan in 1999, the government debt is increasing for years. Paper selected 1990-2003 as the sample area asked basically encompasses four stages.
2. Initialization transform the original data, then calculate the absolute value of the parent sequence of each sub-sequence in each time; find the maximum and minimum values ??from the base sequence and the promoter sequence in the absolute value of each time were: max = 110971.8, min = 0; then substituted into the formula to calculate the to draw each sub-sequence each time the correlation coefficient (-1) with the parent sequence.

As can be seen from Table-2: the impact on the national debt scale efforts to sort order of bond debt service, the budget fixed assets investment, the balance of government bonds, fiscal revenue, fiscal spending, the balance of savings deposits of urban and rural residents, and GDP.

Third, the analysis based on the gray correlation degree of the scale of the issuance of treasury bonds influencing factors

1. Treasuries solvency analysis. Greatest impact on bond debt service from the point of view of the Grey Relational Analysis on the national debt scale, its associated 0.989, sort, which can reflect the national debt subordinated bond debt service measure debt capacity issue size of the national debt is the greatest impact. Bond debt service ratio is the proportion of the central fiscal revenue in the year when the debt service accounted for, the ratio measure of a country in a given period the central government debt, the lower the ratio, indicating that the central government's solvency the stronger; higher the ratio, a considerable part of the expenditure of the central government is used to repay debt, will be weaker solvency. The highest bond debt service associated degrees from the Scale of National Debt can be seen, the issuance of treasury bonds in China's fiscal expenditure part used to repay debt.
The 1989 bond debt service ratio of about 3%, because the debt service to government bonds began in China from 1986, shows that by 2002 China Statistical Yearbook. Bond debt service ratio showed a rapid upward trend since 1990, rising to 35% in 1992 from 11% in 1990 to a straight line and the future, despite the decline, but began to rise in 1995, reached a maximum level of 46% by 1998 . This shows that the solvency of the central government in the waning. Due to the financial system, the proportion of China's fiscal revenue of the central government total fiscal revenue is still low relative to the developed countries in the West, in 2001, only 53.05 percent, therefore the ratio calculated undoubtedly higher. Modern national debt management system, can be raised in new debt to repay old debts will be reduced, so that the pressure on the fiscal revenue that year, and that government debt is further expansion pressure and from the other hand. China's bond debt service ratio is high, more than the international warning level (10%). In addition, the maturity structure of the national debt is not reasonable, the bond repayment period is too concentrated, the next period of time in our country also faces the problem of high debt service ratio.
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