Research on the Macro Effects of Asset Price Volatility during the Systemic Transformation

Author: Zhou Chengjun
Publisher:
Publish Date: 2004-03-01
Features: This book begins with an analysis of the operation of the capital market and its price fluctuations during China's institutional transition. While institutional transition is not the root cause of asset price volatility, market institutional defects associated with the transition process significantly exacerbate market uncertainty. This effect is primarily reflected in abnormal asset price fluctuations. It is precisely this transition-induced abnormal asset price volatility, combined with the distortion in the behavior of micro-market entities under the transition conditions, that leads to macroeconomic effects of asset price fluctuations that do not conform to general patterns. The analysis in this book primarily revolves around the impact of asset price fluctuations on three main macroeconomic variables: consumption, investment, and money. It employs theories from neoclassical macroeconomics and new Keynesian macroeconomics as the main analytical tools.
At the same time, as a fundamental methodological orientation and analytical foundation, this book establishes theoretical research on macroeconomic variables on a unified microeconomic basis of utility maximization. It discusses the macroeconomic effects of asset price fluctuations from the perspective of the optimal behavior of market entities. To this end, the book focuses on analyzing the impact of asset price fluctuations on the consumption-saving behavior, investment behavior, and money-holding behavior of micro-market entities, thereby revealing the internal mechanisms and transmission processes through which asset price fluctuations affect each macroeconomic variable.
On this basis, the book makes judgments about the effects of asset price fluctuations on macroeconomic variables and macroeconomic economic growth during China's institutional transition through empirical analysis and testing of data, and provides relevant theoretical explanations. Finally, the book proposes corresponding policy recommendations based on the analysis conclusions.