The Association Study On Main Macroeconomic Variables And Fluctuation Of Business Cycle Among China, Japan And Korea

China,Japan and South Korea are the most important country in East Asia.They have strong economies.Their linkages in business,trade and financial linkages are more closely and they need each other more and more.The characteristics of their business cycle are similar in many factors,and different in other factors.In context of the global economic crisis,the economies of China,Japan and South Korea have been hit inevitably in varying degrees.The governments of China,Japan and South Korea have to take positive and effective measures to promote economic development and reduce the impact of economic crisis.In order to promote the economy of the region to develop better,faster and more stable,we need to look into the main macroeconomic variables how to influence the development of the economies and the level of this affect in these three countries.And we should carry out much evaluation to the monetary and fiscal policies adopted by the Government,and make a comparative analysis of the main characteristics to those influencing factors in those three countries.The beginning of the article is preamble,which provides the background and significance information on the topics of this article,and illustrate the content,methods and structure of the research.From the beginning of October 2007,the sub-loan crisis in United States starts to upgrade,and now has evolved into a global economic crisis.The crisis not only makes the financial markets under a lot of impact,but also affects the real economy.All countries carry out a lot of active and effective macroeconomic policies,such as increasing the scale of financial investment and the export tax rebate rate of export enterprises to reduce the burden on enterprises,and reducing the tax burden,The purpose of those policies is actively to help domestic enterprises to be out of the plight of the economic crisis.Although all countries' object is to make their economies be out of the economic crisis and the economic development back to normal,their response to the sub-loan crisis and macroeconomic policies implementing vary each other.Because their business cycle fluctuation is different. In the Chapter 1,I introduce the Business Cycle theory.First the article introduces the meaning of fluctuations in the business cycle,and then describes the characteristics of business cycle fluctuations and its categories.Business cycle(business cycle) is defined as the general course of economical operation and an economic phenomenon of the emergence of economic expansion and economic contraction in turn.Usually we refer to the fluctuation of gross national income,total output and total employment.We divide the fluctuation of business cycle into two categories:classical business cycle and growing business cycle.Fluctuations in the business cycle are divided into four stages,the economic recovery,economic prosperity,economic recession and depression.As for the characteristics of fluctuations in the business cycle,this paper describes the frequency of the fluctuations in business cycle,the extent of the fluctuations,the duration of fluctuations, fluctuations in synchronous and non-symmetry.We make the classification of fluctuations in business cycle,mainly on the basis of the duration of business cycle fluctuation.The classification are as follows:Kitchen-cycle(short cycle),Juglar-cycle(average cycle) and Kondratieff cycles(long cycle).Kitchen cycle is brought out by Kitchen,who is a British economist.Kitchen cycle lasts three or four years in average.Juglar-cycle is brought out by Juglar,a French economist.Juglar-cycle lasts usually about nine to ten years.Kondratieff cycle is found out by Russian economist,Kondratieff.This cycle has a period of fifty years from the sixties,and the average is Fifty-four years in this business cycle.Subsequently, Austrian economist Schumpeter made a comprehensive analysis of the above-mentioned three kinds of business cycles.The length of each long cycle is equal to six average cycles. Each average cycle consists of three short-cycles.He divided three long-cycles,namely, the cycle of Industrial Revolution era,cycle of steam times with the iron and steel and electrical,chemical and automotive cycle times,which marked by major technological change,In chapter 2,we tell the research status of the business cycle at home and abroad.The first part describes the theory of fluctuations in the business cycle,what the various schools of economic theory have.Classicism school thought that the nominal wage can be adjusted quickly,so no matter how the price changes,the labor market is always in the full employment level and the output is always in a state of full employment output.So the classicism school believes that the aggregate supply curve is vertical,and the reason of the fluctuation in the business cycle is extemal shocks to the aggregate supply,such as technical progress.And those extemal shocks make the output in the state of full employment level change actually.Because of this,the aggregate supply curve moves in vertically.But the change in aggregate demand will not affect the actual economic output. Keynes denied the assumptions that price and wage can flexibly adjust.Instead,he believes that prices and wages are rigid.When the aggregate demand changes,the price is not have sufficient time to adjust.The economic society can provide aggregate supply in any number(less than the aggregate supply in the level of full employment) before the economy achieves the status of full employment.It means that aggregate supply can be adjusted arbitrarily with the same price level.The aggregate supply curve is horizontal.So Keynes thinks that the fluctuation of the business cycle is due to the changes in aggregate demand and insufficient demand.That is the theory of insufficient effective demand. Modern monetarist school of thought that the fluctuation of business cycle is due to the disturbance of currency,that is,the impact of the currency factor is the main reason for economic fluctuations.They wanted the government to implement a single monetary policy,and to avoid frequent changes in aggregate demand leading to changes in real output as well.Rational expectations school views that Keynesian's view didn't have micro-foundation and they adopted the assumptions of market cleating and maximum of benefits,which is agreed by neoclassical school.Rational expectations school introduces the theory of rational expectations,that is,economic agents can use all current information on the formation of economic variables to get the value of expected future.They think that fluctuations in the business cycle are due to a number of social reasons,such as information asymmetry and the oil crisis.The new Keynesian not only inherited part point of the Keynesian,but also made some improvements of Keynes's part views.They agree that the instability of aggregate demand and aggregate supply are both the major reasons for the fluctuations in the business cycle.And they also agree with the point that the instability of money supply is another important reason for the fluctuations in the business cycle.In addition there are some introductions of theory of fluctuations in the business cycle,such as pure monetary theory,under-consumption theory,and investment theory. And then we introduce the research status of the business cycle at home and abroad.In chapter 3,we have some introductions of Research Methods for time series and some theory.First we introduce the unit root test,which is used to test the stationary of time-series data,and this article use the unit root test of ADF test methods.Then we introduce the co-integration theory.Although some economic variables is non-stationary itself,a linear combination of them may be a stationary series.So we need make the co-integration test to those variables.There are two ways to have co-integration test:one is based on the regression of coefficient,such as the Johansen test;the other is based on the regression residuals,such as the ADF test.This article uses the Johansen test method.If there are co-integration relationships between those variable,you can create vector error correction model and estimate it.And then we can use the Granger causality test method to test whether the variables exists a causal relationship.The Granger causality test solves the problem of whether X is Y's granger causality and how much degree Y can be interpreted by the past X.The last is the impulse response function and variance decomposition. Impulse response function can be used to determine what influence will be having to a variable by a disturbance to other variables impact.Variance decomposition is based on the structure impact of internal changes in the contribution of variable degrees,to determine the importance of different structures and each impact on the relative importance of random disturbances.Chapter 4 is the empirical part of this article.We use the time series analysis method introduced in Chapter 3 to analyze the comparative influence of macroeconomic variables to the GDP in China,Japan and Korea.First is the unit root test to the variables we use, testing whether they are stable,whether they are non-stationary in the same lag order.Then we use the co-integration test to find whether there is,and the test results show that there is a co-integration relationship existence between these variables.So we can establish Vector Error Correction model,and select the optimal lag order and model estimation.We choose lag 3 to the Vector Error Correction model of China,and lag 4 to the Vector Error Correction model of Japan,lag 3 to the model of Korea.And we estimate the models.Next we make Granger causality tests of variables to the three VEC models and to test whether there are the causal relationships between the key macroeconomic variables and GDP.The final is impulse response function analysis and variance decomposition analysis in China, Japan and South Korea.The purpose is to check that what the impact to GDP is when the main macroeconomic variables meet a random perturbation and those variables' ability to explain the error happened to GDP.The main content of Chapter 5 is based on Chapter 4,we summarize the findings of the analysis.We think the government should take some active macro economic policies, and combined with some other economic policies.All those suggestions are promoting the joint development of those three countries.