Empirical Research To The Interrelationship Between Stock Market And Economic Growth In China

The relationship between the stock market development and the economic growth has always been the topic research which attracted the economic scholars. At present, there are two viewpoints about the relationship between stock market and economic growth existing in the domestic and foreign academic field : One is that there are positive relations between the stock market and economic growth, the other one is that there are negative relations between the stock market and economic growth.During the past 10 years, in the historical context of China's economy maintaining rapid growth and the stock market undergoing the alternate of the bull and bear market, this paper makes a deep analysis on the relationships between the stock market and economic growth from the theoretical and empirical aspects. Firstly, this paper makes a brief discussion about the research background, purpose ,framework as well as possible innovation in the introduction part; The second part introduces the current research on the relationships between stock market and economic growth inside and outside in the literature review; The third part expatiates the theory model and transmission mechanism of the stock market and economic growth; The fourth part through the establishment of VAR (Vector Autoregression) model, we continue to analyze the relationship between the stock market and economic growth with Unit Root Test , Cointegration Test, Granger Causality Test, Impulse Response Function and finally set up VEC(Error Correction Model),and analyze the dynamic relationships from 1999 to 2007 between the stock market development and economic growth; The fifth part gives some policy proposals for the results of empirical analysis; In the last part ,we get the main conclusions of this paper and raise the issue for further study.Through the study we find: the relationship between the stock market scale and economic growth does not promote each other as theory explaining , but show a negative relation, that is to say, enlargement of stock market not only improves economic growth but also blocks it; The correlation is not evident for the economic growth and stock market liquidity .What is more, the inter-casualty of the stock market scale , the stock liquidity and economic growth are both not very obvious. Finally, this paper analyzes the core reason of the negative relation between the stock market and economic growth, and gives some specific policy suggestions to develop and perfect our stock market ,and improve the stock market efficiency, such as consolidating and enlarging the fruit of reform of non-tradable shares, protecting the legal right of investor, perfecting the listed company's governance, constructing multi-layer stock market system and so on.