| With the transformation of the world economic landscape and the continuous development of financial globalization,the fluctuations in financial markets among major economies in the world are transmitted and influenced each other,and affect other countries.In 2008,the US subprime mortgage crisis triggered the outbreak of the global financial crisis,and countries around the world realized that the transmission of financial risks would cause huge harm to their real economy.More and more scholars both domestically and internationally hope to predict the emergence of financial crises through changes in major financial indicators in global financial and economic activities,gradually forming the concept of "financial cycle" in this context.The financial cycle refers to the sustained fluctuations and cyclical changes in financial variables closely related to a country’s macroeconomic long-term equilibrium(Deng Chuang and Xu Man,2014).It is formed by the transmission of financial and economic activities through the financial system under the influence of internal and external factors.Market risk and uncertainty,and the financial cycle referred to sustained volatility and cyclical changes were closely related to the long-term equilibrium level of the macroeconomy.In the context of financial globalization,this article describes the dynamic relationship between economic prosperity and financial risks within a country through its financial cycle;the relationship between sustained fluctuations and cyclical changes in financial variables in various countries around the world is described through the international financial cycle.With the continuous development of financial expansion,financial risks will also increase(Zhu Taihui and Huang Haijing,2018).Its core connotation lies in the cyclical fluctuations of the financial system,which are the normal state of alternating prosperity and depression.The fundamental driving force of these fluctuations lies in the mutual reinforcement between financing constraints and risk perception(Bi Zhenyu,2020).Exploring the operational patterns of the financial cycle not only helps to reveal the impact of financial factors on the real economy,but also provides important references for formulating financial market reform measures and macroeconomic regulation policies.Under the background of the existence of the financial cycle and the financial cycle of a country,the main problems studied in this paper are as follows: How to measure the financial cycle and the financial cycle of each country more effectively?How does cross-border capital flow under financial cycle shocks? How do exchange rates change under financial cycle shocks? What impact will financial cycle changes have on China’s financial market risks? And how does the impact of the financial cycle on China’s macroeconomy change? Studying the formation mechanism and intrinsic logic of a country’s financial cycle is of great theoretical significance for grasping the dynamics and laws of macroeconomic operation.This paper intends to synthesize a more comprehensive financial cycle index through principal component analysis,so as to lay a good theoretical foundation for better exploring the relationship between financial cycle and economic variables,and to fully grasp the resonance or dislocation of financial cycle in different financial markets(exchange rate,capital flow and financial market risk),and then transmit it to the dynamic evolution process of real economy.The research in this paper will enrich the theoretical system of financial cycle to a certain extent and promote the development and application of dynamic general equilibrium theory in macroeconomics.Given this,this article follows the research logic of "theoretical evolution sorting→ theoretical model construction → empirical results analysis → conclusion and policy recommendations".The study focuses closely on four key issues: the connotation and measurement of financial cycles,the impact of financial cycles on cross-border capital flows,the impact of financial cycles on exchange rate fluctuations,the impact of financial cycles on China’s financial market risk,and the macroeconomic effects of financial cycle fluctuations in China.In terms of research ideas,the study is conducted in the following sequence: "literature review and theoretical basis → analysis of the measurement and evolutionary characteristics of international and national financial cycles → research on the impact of financial cycles on cross-border capital flows → research on the impact of financial cycles on exchange rate fluctuations → research on the impact of financial cycles on China’s financial market risk → research on the impact of financial cycles on China’s macroeconomy".The specific research content and research methods used in each section are as follows:The first part of the study,"Theoretical Evolution and Review," is composed of Chapter 1 and Chapter 2,which consist of an introduction and literature review.Chapter 1,the introduction,mainly explains the research background and significance of this study,clarifies the research ideas,framework,and methods,and finally summarizes the innovative points of this study.Subsequently,Chapter 2systematically reviews relevant studies on international and national financial cycles at home and abroad and compiles them into a literature review.It discusses and reflects on the connotation of the financial cycle,new developments in research on the transmission effects and policy responses of the financial cycle,and relevant theories and literature reviews on the financial cycle.This provides a solid and rich literature support for the research that follows.The second part,theoretical model construction,consists of Chapter 3 and Chapter 4.They are respectively about constructing theoretical models and financial cycle indicators.Chapter 3 explores the theoretical foundation of the relationship between financial cycles and cross-border capital flows,exchange rate fluctuations,the Chinese financial market,and the real economy.Then,dynamic stochastic general equilibrium(DSGE)models for cross-border capital flows in different financial markets are constructed.Chapter 4 first explains the importance of measuring financial cycle indicators,then summarizes the relevant literature on measuring these indicators,and finally lists the reconstruction of financial cycle indicators.The third part of the empirical results analysis is composed of chapter five,chapter six,chapter seven and chapter eight.The fifth and sixth chapters focus on the impact of the financial cycle on global finance.The seventh and eighth chapters focus on the economic and financial development in China and explore the changes in China’s economic and financial status under the impact of financial cycles.The fifth chapter emphasizes the relationship between the financial cycle and cross-border capital flows,and uses the fixed effect(LSDV)method to empirically study the relationship between the financial cycle and different types of cross-border capital flows;then,the quantile regression method is used to empirically analyze the different sensitivity of cross-border net capital flows of different scales to the financial cycle.The sixth chapter focuses on the analysis of the relationship between the financial cycle and exchange rate fluctuations.The two-way fixed effect model is used to analyze the relationship between the financial cycle and exchange rate fluctuations,and the panel vector autoregressive(P-VAR)method is used to draw the conclusion that the single change of the financial cycle has a continuous effect on the exchange rate for up to 7 months.The seventh chapter emphasizes the relationship between the financial cycle and China’s financial market risk,and uses the time-varying parameter vector autoregressive(TVP-VAR)model to empirically analyze the impact of the upswing of China’s financial cycle on the risk in the domestic financial market,and draws the conclusion that the exchange rate plays a buffer role in the process of financial cycle affecting financial market risk.The eighth chapter analyzes the relationship between the financial cycle and China’s real economy and also uses the time-varying parameter vector autoregressive(TVP-VAR)model to empirically analyse the impact of China’s financial cycle on China’s real economy.The upward financial cycle has a continuous positive impact on China’s industrial added value,that is,the upward domestic financial cycle promotes the rise of domestic industrial added value;at the same time,the impact of financial cycle on the primary,secondary and tertiary industries has strong heterogeneity.Specifically,the upward financial cycle has a strong volatility in the role of the primary industry,which promotes alternating changes.The impact of the financial cycle on the secondary industry and the tertiary industry shows a distinct polarization.The upward financial cycle will inhibit the development of the secondary industry,but at the same time,it will bring a strong impetus to the development of the tertiary industry.The fourth part of the conclusions and policy recommendations is the ninth chapter.The ninth chapter first makes a comprehensive summary of this paper and draws important conclusions based on the empirical results of the previous chapters.Secondly,combined with the empirical results and the current political and economic forms at home and abroad China’s opening up process and the development of capital projects,the relevant policy recommendations are put forward in connection with China’s reality.First,Chinese government departments should further establish and improve cross-border capital flow detection,early warning and corresponding mechanisms to dynamically monitor the flow direction,flow and volatility of cross-border capital flows.Second,continue to promote exchange rate market reform;the third is to steadily promote high-level financial openness,accurately control and avoid the possible negative effects of financial openness,and maximize the economic benefits brought by financial openness;fourth,China should moderately expand the coverage of structural monetary policy,optimize the structural monetary policy system,guide capital to flow into the real economy,improve the efficiency of policy funds and the effectiveness of monetary policy,and provide a good environment for the financial cycle to release positive economic effects. |
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