Empirical analysis of influences of fictitious economy on real economy in China

Abstract

Influences of fictitious economy on real economy appeared gradually in China. An empirical analysis about the influences was given by using quarterly data from April 1998 to December 2008. The results show that there is cointegration relationship between China's fictitious economy and real economy in the long term; there is Granger cause of the representative variables of China's fictitious economy to the representative variable of real economy respectively; the influences of the turnover of stock trading, the turnover of foreign exchange transactions, and the turnover of commodity futures trading on the real economy are much remarkable based on the least squares analysis which is consistent to the conclusion of variance decomposition; and the effect from stock market to real economy is strongest in China. Therefore, the results indicate that the influences of stock market, foreign exchange market and commodity futures market on real economy development of China are much remarkable.