The Correlation Research Between China’s Business Cycle Fluctuation And International Business Cycle Fluctuation

Under the background of economic globalization, the flowing of the goods,services, and capital is enhancing, the economic ties between countries areincreasingly close. Under the open economy, a country’s economic fluctuations will becommunicated through various channels to other countries, gradually forminginternational economic fluctuations. At the same time business cycle is moreimportant issue in macroeconomics, so whether China’s business cycle is associatedwith the international business cycle, or how much is the relationship, the mechanismeffect of the transmission is more and more important.First of all, in order to take analysis on China’s economic cycle, the internationaleconomic cycle was divided into business cycle in the developed countries,developing countries. By using vector auto-regressive model with Markov regimesswitching,we take analysis for China’s business cycle and the international businesscycle, the business cycle is divided into recession, economic stable growth phase, thehigh-speed economic development stage, we can get the average growth rate indifferent stages of the business cycle, transition probability and the average duration,also take dynamic identification for business cycle. The way of estimation is betterthan absolute analysis of existing research. Through the comparison with realeconomic activity, we found the Markov regime switching model can well explain thebusiness cycle.Secondly, based on Markov regime switching model, we use the method ofcorrelation to analyze the relationship between China’s business cycle and theinternational business cycle. Under the condition of three cycle phase we found thatduring the recession period the correlation of business cycle is very high, having thepositive spillover effect; At the same time, using the method of impulse responsefunction, analyzing China’s business cycle response under system transformation andeach country’s economy reaction, we found that in the third quarter Chinese general aimpact influence began to slowly deepened, after10quarters the influence slowlydisappear; And then to simply describing the whole economic growth in developedeconomies and developing economies, we found some state could well explain theeconomic fluctuation trend of the economy as a whole, China’s business cyclecorrelation exists with the international business cycle. Finally, analyzing the influence factors of synchronization between China’sbusiness cycle and international business cycle, establishes dynamic panel model, andthe explaining variable is involving trade density, the intensity of FDI and industrialstructure difference degree, geographic distance between countries and lag ofsynchronicity index. We use system GMM to estimate dynamic panel model. Based onthe estimated results, combining with the actual situation of China, we put forwardrelevant policy suggestions to promote sustained and coordinated economicdevelopment.