Research On The Correlation Of Financial Pressure And Economic Steady In China

With the liberalization of finance,the continuous development of economic globalization and the continuous relaxation of financial supervision in various countries,financial turmoil has become the norm in the global economy in recent years.The frequency of financial turmoil is getting higher and higher and destructive.Studies have shown that financial pressure is the main cause of financial turmoil,and financial turmoil is the result of the accumulation of financial pressure.Therefore,how to effectively control the generation and accumulation of financial pressure under the premise of maintaining stable economic growth and ensure the sustainable and healthy development of the financial system is the focus of research in recent years.In recent years,the pace of China's financial reform has been accelerating.At the same time,it has been affected by fluctuations in the world economy,financial pressures have accumulated,and research and prevention of financial pressure are even more urgent.Although there has not been a major economic crisis in China,it has not avoided the volatility of financial instability,and our economy is in a critical period of transformation.Therefore,in the face of economic globalization,it is of great theoretical and practical significance to carry out the quantification of China's financial stability and its impact on the objectives of monetary policy.Based on the existing domestic and foreign literatures,this paper sorts out the existing methods and applications of financial stress.Given the availability and consistency of data,the monthly data from April 2006 to December 2017 is selected.The analysis is carried out.The selected indicators come from the banking sector,the stock market,the bond market,the foreign exchange market,the real estate market and the insurance market.The principal component analysis method is used to synthesize China's financial stress index.The structure of this paper is as follows:The first part is the introduction,which mainly describes the background of the writing,the literature review at home and abroad,and the significance of the research.The second part is the related concepts of financial stress index,the relationship with economic growth theory and the theoretical relationship with monetary stability.The third part is the construction of China's financial stress index,including the basis of variable selection,data source,data processing method,and construction method of financial stress index.The fourth part is the analysis of the impact of financial pressure on the real economy and currency stability.The macroeconomic consensus index,CPI,interest rate and M2/GDP are variables that measure the macroeconomic situation and currency stability,and use the impulse response function of the VAR model for quantitative empirical analysis.The fifth part is the conclusion of this paper and related policy recommendations.This paper reasonably calculates the financial stress index,which is in good agreement with the domestic financial events and has certain practical significance.Granger test and impulse response analysis were performed by correlating financial stress indices with economic growth and currency stability.The empirical results show that financial pressure has a significant negative impact on the real economy,inflation,and interest rates,and has a positive effect on the money supply.The financial stress index can be used as a leading indicator of the macro economy to a certain extent,and it also has an impact on the target of the implementation of monetary policy.The empirical results show that China's financial pressure mainly comes from its own pressure accumulation and circulation,and the impact of economic growth rate on financial pressure is much smaller than the impact of financial pressure itself.The significant negative impact of the financial stress index on inflation indicates that when analyzing the impact of financial pressure on the real economy,the indirect impact of inflation should not be neglected.It should be carried out with a more dynamic structural model of dynamic mechanism,in the formulation of stable inflation.In economic policy,attention should be paid to financial pressure shocks rather than just the traditional inflation-output trade-offs.Financial pressure has a positive effect on the money supply and a negative impact on interest rates,indicating that it is necessary to add the financial stress index as an independent indicator to the monetary policy objectives.The monetary authorities should set the financial market when setting monetary policy.Pressure index factors are taken into account.Finally,the paper concludes with the conclusion that "the financial pressure index is reasonably constructed and used as the leading indicator of the macro economy and cooperates with the implementation of the rele-vant monetary policy,thus contributing to the economic growth and maintaining a stable growth rate".Put forward relevant policy recommendations from three aspects:financial pressure measurement,comprehensive supervision and cooperation mechanism with monetary policy implementation,in order to better prevent systemic financial risks,promote financial stability and stable development of macro economy.