Empirical Studies on the China’s Financial and Economic Cycles——Policy options on the double cycles
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| Title | Empirical Studies on the China’s Financial and Economic Cycles——Policy options on the double cycles
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| Author | Wang jinbin, Lu liyang and Shi wendong |
| Organization | Renmin university of China; Shanghai Haitong Securities Asset Mangement Co.,Ltd. |
| Email | wjinbin@ruc.edu.cn; lly_nicole@sina.com；shi@ruc.edu.cn |
| Key Words | Financial cycle; Economic cycle; Domain analysis |
| Abstract | This paper uses more matched sample and low frequency domain analysis method to study China's financial cycle. We find credit, credit/GDP, M2 and real estate prices, not the stock prices, are important variables to identify China's financial cycle, and the financial cycle is indeed an endogenous economic phenomenon that differs from the traditional economic cycle. The financial cycle is generally longer and larger than the traditional economic cycles identified by GDP. According to the estimation of the cycle behavior path, the financial cycle of China is around the peak of the end of 2016, and the economic cycle is basically at the inflection point of the trough value. Financial cycle downturn may bring harm to the recovery of real economy. Macro-policies need to ensure the smooth transition of the double cycle. The primary objective of monetary policy should be to ensure the stability of the financial system, maintains a neutral relative tight state to ensure the smooth transition of the peak inflection point of the financial cycle. Since the economic cycle is basically in the slot-value inflection point, it needs the active cooperation of fiscal policy, without strangling the recovery of the economic cycle under the premise of guaranteeing the smooth transition of the financial cycle. |
| Serial Number | WP1406 |
| Time | 2019-08-16 |
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