Stock Market Wealth Effect Of China

Wealth effect of stock market means that the fluctuation of the wealth amount will influence the consumption, and even influence the economy. From American experience, we can see that American wealth effect was marked and had two sides: The stock market has kept boom in a long run and promoted economy in 90s. In the past years the stock market slumped and handicapped economy. This paper systemically analyzes Chinese stock wealth effect and uses for reference American experience, then probes into the restriction factor of wealth effects of stock market through the cases of American stock market. Besides, it provides some countermeasures and suggestions on fully utilizing the wealth do not effect to stimulate consumption and economy. This paper principal used the Engle-Granger Co-integration Analysis theoretical models, contrast analysis and academic analysis and describes the intrinsic mechanism and the external trend of wealth effect of stock market. According to research and analysis, there are two conclusions: 1.The theoretical analysis: Chinese stock market does not exist wealth effect.2.The result by using Engle-Granger Co-integration Analysis and: our country stock price index and Consumption reports weaker negativity whether long-term or short-term, this elucidation Chinese stock market does not bring the certain wealth effect in its development of process, but the restriction factors of stock market such as small stock scale, restrict wealth effect. Controllable income is the dominating factor influencing the consumption. Nowadays The purposes of utilizing the wealth effect to stimulate consumption and boom economy is restricted .As a result, we should refer to the experiences of foreign stock market, enlarge the stock scale, build a comparatively stable and prosperous security market and carrying on the policy of enriching the people. This article also discusses some reasons that infect the wealth effect. This article, specially, also analyzed the reason of stock market's slump, and why it deviates macroeconomic so far. At last, the thesis gives some policy advice expecting that our stock market can really create wealth for people.