Research On The Relationship Between Economic Cycle And Financial Cycle In China

The study of the economic cycle is one of the themes of macroeconomic research,and it is natural to explore what factors have caused economic fluctuations to become the mainstream of research.However,over a long period of time,the study of its causes often focused on changes in the real economic variables,ignoring the impact of financial factors.In 1929,the Great Depression in the United States,the East Asian Financial Crisis in 1998,and the outbreak of the financial crisis in 2008 made continuous research on the relationship between the financial cycle and the economic cycle.From Fisher's “debt-deflation theory” to Bernanke's “Financial Accelerator Theory” and then to the financial factors in the DSGE research framework,a systematic study of the interaction mechanism of the economic cycle and the financial cycle was achieved.With the rapid growth of C hina's economy,the wealth of residents continues to increase.Especially in recent years,the rise in property prices has dramatically increased the scale of assets.Changes in asset prices will become increasingly significant for the economic cycle.Since 2014,prices in our country have been relatively stable,but the stock market has experienced fierce fluctuations.As prices have risen,they have been “suddenly chattering” and corporate leverage has been excessive.Therefore,in an economic environment with a stable price index,financial markets and asse t prices may also fluctuate significantly,causing financial risks to accumulate.Correctly understanding the relationship between the economic cycle and the financial cycle is a necessary condition for preventing the occurrence of systemic financial risks and maintaining a stable economic growth.This paper selects GDP,credit balances,real estate prices,and stock price indicators to use quarterly data to study the relationship between the two from the characteristics of modern business cycles such as synergy(synchronization),correlation,asymmetry,and volatility.The study found that there are objective synchronicities between the economic cycle and the financial cycle in China,but the use of different variables to characterize the synchronization of the financial cycle and the economic cycle is different.The synchrony between the credit cycle and the economic cycle is the most consistent,followed by the real estate price cycle and the stock price cycle.The correlation between the volatility of the economic cycle and the financial cycle differs depending on the stage,and the correlation between the financial cycle and the economic cycle described by different financial variables also has different characteristics.Preliminary studies have found that there is a potential link between the economic cycle and the asymmetry of the financial cycle.This provides a new perspective for explaining the cause of the asymmetry of the economic cycle;studying the impact of the financial impact on economic growth finds that in different growth zone economies,The financial cycle shows different volatility.Further study of the impacts found that the impact of financial shocks in the high volatility zone system is greater than the effect on the economic growth rate in the low volatility zone system.It is worth noting that the positive impact of the credit balance growth rate on the low volatility zone system will have a positive effect on the real GDP growth rate.However,when the economy is in a period of rapid growth,the positive impact of the credit balance growth rate will affect the real GDP.The growth rate has a negative effect.When the economy is growing at a low rate,appropriate expansion of credit growth is conducive to economic recovery and stabilization.In the period of rapid economic growth,tightening credit policies are conducive to stable economic development.The policy implication of this conclusion is that counter-cyclical macro-prudential management measures should be implemented.