Research About The Impacts Of Asset Price Volatility On The Internal And External Equilibrium In An Open Economy

In 2008,the Subprime crisis triggered a global financial crisis and made the world economy pay a heavy price,that also attracted the attention of academia and governments to the asset price volatility.With the advance of financial liberalization and the gradual increase of the people's income,the financial market and estate market in the world is growing,more and more people hold personal wealth through various financial assets and real estate.The asset price volatility that represented by stocks and real estate has influenced consumption,investment,inflation,and a country's balance of payments deeply,which increased the difficulty to achieve the internal and external equilibrium in the open economy.Since the birth of the stock market,from "thousands of stocks rose by daily limit" to "fallen off a cliff",the phenomenon of China's stock price sharp rose or fallen is well-remembered,meanwhile,China's real estate price is comparable,since the "housing reform" in 1998,a sustained rising appeared in the real estate price,and then the collapse in some areas.The asset price volatility that represented by stocks and real estate has influenced people's daily life deeply,and it also has a significant influence on the internal and external equilibrium,so the difficulty of Macro-control is increasing.Under this background,researching the impacts of asset price volatility on the internal and external equilibrium in an open economy is of great theoretical and practical significance,which is helpful for the efficiency of the China's Macro-control,and it is also useful for the coordinated development of internal and external equilibrium in an open economy.The full text is divided into seven parts to discuss the impacts of asset price volatility on the internal and external equilibrium of open economy in detail,and the main contents are as follows:The first part is an introduction.As the guide and generalization,this part mainly introduces the background and significance of the research,the research route,the contents,the research method and the possible innovation and shortage.The second part is the related theoretical basis and the related literatures.Including the concept of assets,the introduction of asset price determination theory,the internal and external equilibrium in an open economy,besides,this part also reviews the existed literatures about the influence of asset price volatility to the internal equilibrium and the external equilibrium in an open economy,as well as the literatures about the response of monetary policy to asset price volatility.The third part is to study the impacts of asset price volatility on the internal equilibrium in an open economy in detail,including the impact of asset price volatility on economic growth and inflation.Specifically,at first,the paper researches the impact mechanism of asset price volatility on the above variables,and then,according to China's macro economic data,the paper finally comes to the conclusion that asset price volatility influence on China's internal equilibrium.In addition,considering the impacts of asset prices volatility on inflation,to get a prospective macroeconomic policy,the paper also constructs a generalized price index.The fourth part is to study the impacts of asset price volatility on the external equilibrium in an open economy in detail,including the impact of asset price volatility on the current account and the international capital flows,as the research method in the third part,this part researches the impact mechanism firstly,then based on the situation of China,the paper finally explores the impacts of asset price volatility on the external equilibrium.After doing this,in addition,this paper analyses the factors that restrict the influences of the internal and external equilibrium in an open economy.In the fifth part,by reviewing the classical macro analysis framework in an open economy,based on the conclusions of the third part and the fourth part,this part constructs a double equilibrium theory model that including the asset prices in an open economy.According to this model,the paper analyses the impacts of asset price volatility on internal and external equilibrium in an open economy furtherly,and using the data of China,the paper carries out an empirical analysis on the theoretical model,and points out some problems that need to be paid attention to the Macro-control of double equilibrium in an open economy.After getting the impacts of asset price volatility on internal and external equilibrium in an open economy,considering the limitations of the traditional Macro-control,the sixth part extends the connotation of Macro-control of double equilibrium.This part points out that monetary policy,especially the Capital Control Tactics should take attention to the asset price volatility.Based on China's data,the paper confirms that monetary policy did focus on the asset price volatility,and carries out an empirical analysis on the efficiency of capital control in China.The seventh part is the main conclusions.The theoretical analysis and the empirical analysis that based on China's Macro-data show that asset price volatility does affect the internal and external equilibrium,which is characterised by economic growth,price stability,full employment and the balance of payments.The double equilibrium theory model that including the asset prices in an open economy extends the connotation of Macro-control.The monetary policy that taking into account the asset price volatility and the discretionary capital controls is useful for the coordinated development of internal and external equilibrium in an open economy.