A t the beginn ing of the paper, the m ean ing of th is top ic is analyzed and the app rop riateness of IS2LM model fo r analyzing the Ch ina’s econom y is assessed. O n the basis of them , an IS2LM model is estab lished and est im ated by econom et ric m ethods. F rom th is model, som e impo rtan t suggest ion s can be draw n: 1. F requen t changes of po licies tend to enhance the uncertain ty of m acroeconom ic po licy; 2. A t p resen t, the basis fo r m acroeconom ic po licies to funct ion ex ist s in Ch ina to som e degree; 3. The f iscal po licy can st im u late the ou tpu t mo re eff icien t ly than themonetary one in cu rren t Ch ina. Therefo re, w e shou ld depend mo re on f iscal po licies to recover the declined econom y, bu t the lag of act ive po licies should not be neglected