Research On Relations Between The Development Of Chinese Stock Market And Economic Growth

The paper focuses on the relations between the development of Chinese stock market and the economic growth, and tries to find long-term consistent quantitative relation between relevant index of stock market development and the economic growth. Econometric models were established between shares fluidity, fluctuation and capitalization rate and relevant macro variables. Main methods of econometric measurement used are Unit root test, Co-integration test and Granger causality test. GARCH (1,1) was used to discuss the influence of Index of Shanghai Stock Market on the household saving. VAR model was established to measure the index of stock market development and growth rate for GDP. Impulse Response of GDP growth rate to shares fluidity, fluctuation and capitalization rate was analyzed. The conclusion of the research indicate that the stock market variables arousing current growth of macro-economy all happened in the last period. In the Short run, there is feeble negative correlation between the overall development of Chinese stock market and economic growth. The phenomenon of savings diversion is obvious in the stock market. Rapidly rising stock market will bring about a certain degree of inflation. Based on the current data, development of the stock market has no influence on macro-economy for the long run.