Research On The Impact Of China Financial Cycle On The Growth Of Real Economy

A theme of macroeconomic research is the study of the economic cycle,the mainstream of research is the factor which has caused economic fluctuations.There is a bad influence on the macro economy from the large fluctuation of financial markets because of the global financial crisis.It makes scholars rethink the theory of traditional business,the financial cycle theory gives a new idea and analytical perspective to the long-term economic growth.In order to research the interaction mechanism between the economic cycle and the financial cycle systematically,the study can start from the Debt-deflation Theory to Financial Accelerator Theory,then to put the financial factors into the DSGE research framework.China‘ economy has grown rapidly,residents‘ wealth continues to increase.In recent years,the increase of the rise in property prices causes the scale of assets.It is significant to the economic cycle that the asset prices has changed.The prices in China have been relatively stable since 2014,but there are fierce fluctuations in the stock market.With the rise of the prices,there is ?suddenly chattering? in the prices and it causes a excessive corporate leverage.So,in the economic environment of a stable price index,the asset prices and financial markets are probable fluctuate significantly,which will cause some financial risks to accumulate.It is a necessary condition to understand the relation between the economic cycle and financial cycle correctly for maintaining a stable economic growth and decreasing the occurrence of systemic financial.Firstly,in order to measure the financial cycle of China,it uses the method of HP filtering and principal component analysis.Secondly,this paper builds a simple VAR model on the growth of the real economy and the financial cycle,and makes a simple verification of the interaction between the growth of the real economy and the financial cycle in China.The results prove that the real economic growth and the financial cycle cannot constitute a simple interaction mechanism,and there may be other factors in the relationship between the real economic growth and the financial cycle.Then,based on the foregoing,the monetary policy control is selected as an intermediary and a TVP-VAR model is used.The model empirically explores the relationship between the real economy and the financial cycle,as well as the relationship between the growth of the real economy,the financial cycle,and monetary policy,and verifies the effectiveness of monetary policy regulation on the growth of the real economy.The results show that the financial cycle can be used as a leading indicator of the development of the real economy at this stage.The financial cycle can predict and timely intervene in the development of the real economy in the short to medium term;the effectiveness of monetary policy instrumentation has diverged after the economy entered the new normal,and interest rates The price-based regulation represented by it has been continuously strengthened;the financial cycle can still have a better strengthening effect on the development of the real economy in the short term through the strengthening of short-and medium-term monetary policies.