Research On The Matching Cycle Of Stock Market And Economic Growth

The stock market is an important part of the capital market, from a global perspective, the roleof the stock market has not only financing for business development, and is an effective platform tooptimize the allocation of resources. Because of the growing size of the stock market, the impact oneconomic growth is also increasingly significant. The current volatility in the stock market tends tobring overall macroeconomic changes. Therefore, the study of the interaction between the stockmarket and economic growth mechanism are paying more and more attention. However, thecorrelation between the stock market and economic growth from the date of birth on the stockmarket has always been a debate. Most of the early studies of both studies are limited to deviate,there are a lot of empirical research evidence that the departure from the trend of the two. But thepaper argues that the study of the relationship between the stock market and economic growth, andcan not rely solely on empirical research to determine the conclusion, on the contrary, should be thefirst to start from a theoretical point of view to analyze the mechanism of the two, and then to bebased on the theory Empirical analysis and thus more reliable conclusions.Summary relevant research results domestic and international, we found existing research onthe stock market and economic growth has not reached a consensus. Stock market volatility andmacroeconomic research section considers changes the stock market has necessarily indicative ofthe role of economic fluctuations, and changes stock market volatility leading to fluctuations inmacroeconomic; on the stock market and the external economic environment correlation studiesmost think only in the economically more developed countries or regions, the stock market willhave a significant impact on economic development. However, some studies suggest that eventhough there are still some extent among developing countries, the stock market and the correlationbetween economic growth through the development of the stock market, you can achieve thepurpose of promoting economic growth; stock market and economic variables based on correlationof, most due to the choice of different variables and get different results. Research on China’s stockmarket and economic growth of the relationship between the majority agree that there is nocorrelation between China’s stock market and economic growth.After combing the concepts of the stock on the market, the paper argues that there are twoimportant characteristics of the stock market, one is mean reversion, ie, the stock price either aboveor below the central value, there is the central value (intrinsic value) return trends, mean reversioncharacteristics from one side of the stock price does not reflect on every point will reflect all the information timely and accurate stock market, and this phenomenon can introduce the concept ofits average rational explanation, but also stock average rational the second feature of the market.Based on these two features as well as the efficient market hypothesis, we propose an effectivecycle theory of the stock market as an important theoretical basis for matching cycle theory, theeffective theory that there must be a period long enough period of time in the market, the averagetime period securities prices reflect all the information within that period, when the market isefficient market.To match the cycle theory as a basis, we propose a match-cycle theory of the stock market andeconomic growth, which is expressed as: Reflects stock index and stock index to reflect changes ineconomic growth between the magnitude, not in any one point in time or a specific time period arematched with each other, but there must be a long enough period of time so that the two have astrong correlation with each other or called match, this time period is defined as the stock marketand economic growth to match the cycle. Meaning matching cycle theory is not only a measure ofthe degree of perfection of the stock market, but also for economic growth and a measure of therelationship between stock market development. For the general market, the impact of the moredeveloped stock markets on the economy, the greater the same time, the more developed themacroeconomic environment, the impact on the stock market, the more profound, under suchcircumstances, they match the cycle on the more short; Conversely, is the relatively long periodmatching.For verification matching cycle, the paper selected two empirical methods, namely thermaloptimal path method and cross-spectral analysis method, the thermal optimal path method bystatistical physics principle, lead lag relationship between time series analysis, and cross-spectralanalysis is a frequency-domain analysis method based on time-domain analysis based matching todetermine the relationship between two time series. Time domain analysis methods include theco-integration test, VAR model and Granger causality test and other methods. Using these methods,the paper matching cycle in the world stock price index and economic growth were carried outinspection, sample test include: U.S. economic growth indicators and the Dow and the S&P indexmatching cycle, FTSE-100index and the UK match economic growth cycle, DAX index and thematching cycle of economic growth in Germany, Japan’s Nikkei225Index and the matching cycleof economic growth. After tests found, there is a match between the time periods of differentlengths of these stock price index and economic growth, further illustrate the existence of a goodrelationship and interaction between these matching stock price index and economic growth.However, after our country’s stock market and economic growth inspection found that in ourcountry, this matching relationship is not to be estimated. This shows that China’s stock market isstill in its infancy, between the stock markets of developed countries and there is a great gapbetween the stock market macroeconomic representation is not enough.The birth process and the development process of China’s stock market is rather special, the stock market has been the development of guidance and control by government policy, comparedthe government actions with other stock markets, our government action in the stock market moreintervention behavior and more frequent. Expand the scale of China’s stock market in the process,its optimal allocation of resources, gathering funds and promoting China’s economic developmentrole of different risk preferences of investors increasingly significant. However, while the rapiddevelopment of the stock market, the market failure and government failure phenomenon oftenoccurs. Based on the matching period of stock market and economic growth theory, combined withAmerica’s diverse multi-level experience in the stock market, we can find it that realize the healthyand sustainable development of the stock market, our government must reposition itself in the stockmarket regulatory functions, establishing the effective channels of listed companies to enter andexit, change the "not only into" pattern in current stock market, the use of market mechanisms toenhance survival of the fittest stock market macroeconomic representation from shortening thecycle and enhance the matching stock market linkage between economic growth and the furtherdevelopment of the two angles of the stock market in-depth reform and improvement.