Abstract:

Based on the theory of dynamic stochastic general equilibrium (DSGE), from the perspective of rare disaster, this paper analysis the potential risk of government investment structure changes on the steady development of China’s macro economy. The research suggests that the government investment spending will show a significant negative effect for our country's macroeconomic, which increase the economic risk by crowding out the private investment, but service expenditure and other expenditure’s influence are relatively smaller in the disaster economy. At the same time, this paper discusses the influence of different disaster macroeconomic types by distinguishing the TFP disaster, capital disaster and double disaster. The study found that the shocks of double disaster for the macroeconomic more than the TFP disaster and capital disaster. TFP disaster has weak effect for the output, consumption and private investment and capital disaster has weak effect for the employment.