Macroeconomic Stability, Urbanization, and Social Well-Being: Policy Insights from ARDL Modeling
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This study examines the impact of various macroeconomic indicators, including inflation, economic growth rate, unemployment rate, population growth rate, Foreign Direct Investment, and interest rate, on social welfare in China. Therefore, we used the ARDL model to examine both short-run and long-run cointegration among these factors and social well-being, evaluated by two proxies: life expectancy and primary school attendance. The findings indicate a long-term cointegrating relationship among inflation, interest rates, and social welfare, along with a beneficial short-term impact of urbanization. Disadvantages encompass prolonged adverse effects on unemployment, whereas the positives are limited to temporary perks associated with unemployment, such as social support. From this viewpoint, prioritizing the stabilization of inflation and interest rates, advancing strategic urbanization, and implementing policies to mitigate unemployment for social development are essential. The proposed policies include the implementation of inflation targeting in monetary policy, the supply of employment for the urban populace, and the promotion of foreign direct investment in industries that help marginalized communities. The implications of these findings for policy creation aimed at enhancing societal welfare and economic development in China are significant, as the data provides additional relevant references to the policy makers in the drafting of future development plans.
JEL Codes: C32, E31, F21, I31, O18.
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