A Research About The Mechanism That How Governer’s Speculative Behavior Could Cause The Economic Growth And Business Cycle

China’s economic rapid development, it has obtained the achievement which attracts worldwide attention, at the same time this also aroused the economic scholars all over the world to our country economy research upsurge, since the reform and opening up. They study China’s economic growth miracle from different angles using different methods, and gained a lot of insights of improving China’s economic operation. Although China’s economic growth has lasted for more than thirty years and it is still maintained a good growth momentum, we should be aware of possible business cycles while we get these achievements.We establish related models based on the former research with the appropriate assumptions of the governors’behavior in order to study China’s economic growth and the possible business cycles. The governors hold power so he plays a crucial role in the management of local government. Therefore, their behavior should be taken into account when we study economic activities. We set up two different models to describe the behavior of the governor in the third part of this paper:First, the person who pursues maximization of political achievements. In this model, governor has unlimited desire of power, therefore, he set political achievements maximization as a goal among his tenure of office. Only if he maximizes his political achievements should he get superior recognition, and would have got a promotion in the future. In order to solve the model use mathematics optimization methods, we quantify governors’political achievements in this model. We set the political achievements as a function of GDP growth, inflation and unemployment, and give them relative weight, along with these we set a dynamic model and solved it with these conditions. According to the solution of the model we can get some meaningful conclusions:if governor pursues political achievements maximization, the central government could control economy well through adjusts the corresponding weight of parameters. So we can realize higher economic growth lower unemployment and inflation rate. The business cycle exists certainly, but we can get a good control for the economy fluctuating amplitude. A problem that the central government how to design mechanism of officials assessment will be raised when we study this model. If the mechanism is unreasonable, it will cause significant impact on the economy. According to the conclusions of the model we know that either the economy with higher fluctuation and low growth or higher growth and inflation rate, these are not the ideal economic operation modes and should be avoided.The second model that we built is about those governors who own utility maximization as the goal they look political achievements and rent-seeking income as their source of utility. The reason that utility is set as a function of political achievements is that the current political achievements makes an easy way for governors to gain more power and more rent-seeking income. Governors maximize his utility in some constraint. So we can get the optimal path of political achievements and rent-seeking income, through some related conditions we can get the expression of unemployment rate. According to the change of parameters for the unemployment rate we can obtain some knowledge about how the economy operation. We’ve come to the main conclusion according to this model:must have anti-corruption together with official assessment mechanism can central government control the economy. Otherwise, the economy will be divergent.In order to simplify the complex phenomenon, we model governors’ behavior through mathematical methods based on numerous assumptions. So we can process these models through optimization method and the conclusion derives from them also have a certain degree of reliability. And we can get accurate results when we adjust parameters in these models. But, mathematics model is built on the basis of many assumptions, hypothesis conditions, the form of model, variable measurable, and whether parameters could be adjusted are the important aspects, and these are the shortcomings of mathematical model. For example, we cannot distinguish point-in-time for different governors and cannot determine various parameter values accurately. Although model could be accurate, the complexity of the real world sets up obstacles for experience research. This paper is just a preliminary study, more accurately theory needs further research.