Warning And Prevention Of Fictitious Economy Bubble

As the market economy developing, the proportion of fictitious economy in the economic system is increasing rapidly. For example, only the stock market, at the end of 2015, the market current capitalization of all listed companies reached 43.03 trillion yuan, equal to 63.58 percent of the GDP in 2015.However, intrinsic volatility and high risk of the fictitious economy can easily produce bubbles, cause serious damage to the whole economy.The fracture of the real estate and stock market bubble in the 80 of the last century in Japan, brought the Japanese economy to its knees and the financial crisis in 2007 caused by the US subprime mortgage crisis, resulting the weakness in the US economy recovery. Now we can see the damage of the virtual economy to the macroeconomic because of its instability and high risk. Therefore, establishing a fictitious economy bubble warning system and analyzing the causes of fictitious economy bubble, in order to take appropriate measures to prevent the fictitious economy bubble expand rapidly is important to keep our economy develop stably.Firstly this paper use the studies of various scholars to determine the connotation of the fictitious economy and ascertain the scope of this study. Then analysis the reasons of the Japanese real estate bubble. According to the definition of fictitious economy,we select several markets to combine the virtual economy index with factor analyze, in order to describe the degree of the fictitious economy bubble, and create a fictitious economy bubble warning system. Then create VAR model, use impulse response and variance decomposition, quantitative analysis the reasons of the fictitious economy bubble. Through the analyze, the conclusion is fictitious economy is affected by its own tendency, the macroeconomic environment, public macro expectation, the slow progress of science and technology and the excess liquidity in the market. Finally, according to the analysis, this paper make suggestions in four major aspects: market warning, regulation of liquidity, strengthen financial supervision and raise the level of science and technology.