Research On Relationship And Co Movement Between Financial Cycle And Real Economic Cycle

Based on the special phenomenon that in the process of economic development financial cycle is fluctuating a different way compared to the economic cycle, analysis of the current situation that financial development is gradually separating from the economic development. The research will start at distinguishing the financial cycle and real economic cycle from different areas such as fictitious economy and real economy. The main research contents include the following:Firstly, make an analysis on the related economic theories, to acknowledge the research status of domestic and foreign about financial cycle and the real economy cycle. Through the way of comparing with the two objects of their economic theories and the cycle measurement methods, to put forward the research ideas and methods on the relationship between finance and the real economy cycle. In addition, in order to define the concept of financial cycle and economic cycle more scientific, this paper analysis the difference of the two cycles from the aspect of pricing mechanism and study subjects, and explain the reason why to separate the two cycles.Secondly, although there are differences between the two cycles fundamentally lead to expressions of distinction, there also exist some correlation according to the path and the trend of fluctuation in cycle perspective. In order to reflect the fluctuation of China’s financial cycle and the real economy cycle of comprehensive and objective, this paper take it into account that the two cycle fluctuations are changing by time, thus use DCC-MGARCH model to calculate the dynamic correlation coefficient between the two cycles from the point of time series.Thirdly, after determining the two cycles’ correlation, the article go on to test whether the financial cycle and economic cycle fluctuations in a synergistic relationship in the process. Under the theory of common trend and common cycle which is raised by Engle, The article is based on the method of dynamic factor model to find common cycle factor between2000and2012financial cycle and economic cycle in China. Using the common cycle factor respectively to prove the relationship between the two cycles, and then examine the performance of similarities and differences in the economic course in a short term and long term.Finally, based on the results of the theory basic and empirical study, the article puts forward some suggestions to help central bank making macroeconomic regulation. In order to defend sudden events striking the economy in our country, being aware of the impact factors’ dynamic change timely is very important.Therefore, according to the above theoretical and empirical research, this article finally draws the following conclusions:one is that the financial cycle and the economic cycle exit a certain dynamic relationship in the short term and get the similar trend in the long term. The two is that there are differences between financial cycle and economic cycle on the aspects of pricing mechanism. The three is the financial cycle and economic cycle play a mutual promotion in the volatility process. They fluctuate the similar trend of rising and falling.