The Analysis Of The Relationship Between Fictitious Economy And Entity Economy Of Euro Area

From the beginning of1980’s, the industrial structure of the world’s major developed countries began to change gradually. The overall trend is the proportion of the material production entity economy gradually reduced; at the same time the service industry in the economy is rising gradually. Financial and real estate known in academic circles as fictitious economy expands more seriously. Since1970’s, the United States’ fictitious economy has gradually exceeded the traditional industry, and has become a pillar industry of the economy. The sub prime crisis in2008brought big stoke to both finance and entity economy. The scholars have done a lot of research to prove the correlativity between the sub prime crisis and the fictitiousation of economy in the US.Meantime, the Euro Area almost experienced the same changes. The expanding of fictitious economy brings about high risk to economy. Moreover, the decreasing of the entity economy and the atrophy of material product make the European economy no longer have a stable material basement, and its economic strength gradually decreased. The exports of entity are less and less, and its imports are more and more, and its dependence on foreign trade increases year after year. Long-term changes in economic structure results in the Euro Area economic growth’s lack of power, and high rate of deficit and debt has become the problem of the Euro Area economy. Once the external financial environment worsens, government finance can’t stand a fight. From2009to2013, the sovereign debt crisis has almost swep the whole Euro Area. The gradual atrophic of entity economy and expansion of fictitious economic may be a cause for the Euro Area’s economic problems. To correct the unbalanced relation between fictitious economy and entity economy can effectively improve the health of Euro Area and to make the economy develop better.To solve the problem of the Euro Area, the first is to diagnose the problem. Namely we need to know whether or not imbalance between fictitious economy and entity economy in the Euro Area exists, and whether or not serious it is, and it exists in which countries, and whether most countries have this problem or only a few countries have. This requires the research must solve three problems. Firstly, we must know whether imbalance existing between fictitious economy and entity economy is inherent, and if the imbalance is universal, and what are the causes and conditions. This is a theoretical problem. Secondly, we need to find a method to calculate unbalanced relationship between fictitious economy and entity economy in the Euro Area. Just as professor Liu Junmin in Research Center of Fictitious Economy&Management of Nankai University often says, we need a measurement tool, a "Harbert telescope". Thirdly, it is the specific use of this method to calculate out of the Euro Area, and we must study whether quantitative calculation results are same as qualitative observation.This paper adopts methods of theoretical analysis and theoretical model to solve the first problem, namely the theoretical relationship between fictitious economy and entity economy. Theoretical analysis showed that, in contemporary society imbalance between fictitious and entity economy is the fact. The specific performance of four points:the imbalance in aggregate development between the fictitious economy to the entity economy, the department of fictitious economy from entity economy and the imbalance of the economic fluctuation and employment contribution. The traditional transaction monetary model can explain the relationship between price and money supply, but the economic situation of the analysis is too simple; there are only two sectors of the economy. In this paper, standing on the level of development in today’s economy, we transfer the two sectors of the economy into four sectors, and develop the traditional transaction monetary model, and on the basis study the relationship between fictitious economy and entity economy. The aggregate development imbalance does exist between fictitious economy and entity economy, and fictitious economy tends to be expanding relative to the entity economy, which is a universal problem. The reason is because the fictitious economic profit rate is higher than the entity economy; the condition is a naturally occurring. If there is no economic policy intervention, the economy will spontaneously form such a result.To solve the second problems, this paper draws on the research findings of Research Center of Fictitious Economy&Management of Nankai University. Professor Liu Xiaoxin led a team, to develop a set of calculation method of fictitious economy, through the comparison of the two national systems (SNA and MPS) to estimate the total conversion of fictitious economy, and through input-output table coefficient method to estimate the department of fictitious economy from entity economy. I have the honor to participate in this team, and measure the data to learn the theoretical basis and the specific operation of this method. This paper will further improve this method. We use the comparison of indexes of the two accounting system and comparison of other related indicators to measure the fictitious economy and entity economy gross imbalances in the Euro Area. Using the input-output coefficient we calculate the department of fictitious economy from entity economy, the imbalance of the employment contribution. MPS is a set of national economic accounting system used by the central planning economy countries, and its main characteristic is it only accounts material production sectors. The accounting scope is same as the defined entity economy in this paper. At present, the international general SNA is an accounting system of all economic activities. Therefore, I think the comparison of the two accounting system indicators can be a very good response of the proportion of a country’s entity economy in the overall economy. Input-output coefficient reflects the relationship between different sectors, and changes in input-output coefficients between fictitious economy and entity economy can also reflect the change of relationship between fictitious economy and entity economy.Next, the paper began to solve the third problem, the detailed calculation of economic structure of the Euro Area. After the calculation with the two methods this article finds that there is imbalance between fictitious economy and entity economy in most countries of the Euro Area. This imbalance is shown in four aspects:fictitious economy development speed is higher than the entity economy; fictitious economy gradually deviated from entity economy; the fictitious economic fluctuation is larger than the entity economy; fictitious economy’s contribution to employment is less than entity economy.In addition, based on the completion of the above three tasks, this article studies the mechanism of imbalances of fictitious economy and entity economy in the Euro Area leading to the sovereign debt crisis, and tests it by calculation method. Aggregate development imbalance of fictitious economy and entity economy in the PUGS is indeed A cause of the sovereign debt crisis. So to solve the economic problems the Euro Area today, the short term policy goal is to get out of the crisis, and long-term policy goal should be to adjust the industrial structure, and to realize the balanced development of fictitious economy and entity economy. Moreover, the problems in developed economies also provide a warning for China. Today, the industrial system has been established completely, facing industrial roads choice; our country must choose the correct path of economic development, to ensure the development of the entity economy, a solid material foundation for economic development.