Research On The Cycle And Adjustment Of Economic Leverage In China

Since the 2008 financial crisis,the rising risk of sovereign debt and the slowdown of economic growth caused by the "deleveraging" of financial institutions in developed country have attracted the attention of all countries.During the crisis,in order to hedge against the economic downturn,our government implemented a large-scale economic stimulus plan,and China’s economic leverage ratio continued to rise.Leverage ratio is an important index to measure the level of liabilities of each economic entity.The change of leverage is closely related to the economic cycle and the credit environment of various economic entities.Leverage has both positive and negative effects.If the lever is not used properly,it may lead to economic overheating,bubble agglomeration,debt risk increase,and even lead to debt crisis.At present,China’s economy is stepping into a new normal with slower growth and structural transformation and upgrading.China’s economic slowdown has made the debt problem prominent in China’s economic development.In December 18,2015,the central economic work conference pointed out that "deleveraging" was one of the five major tasks of economic structural reform in 2016.It was used to guard against and defuse financial risks and to keep the bottom line of systemic and regional risks.In 2017,the annual government work report pointed out that to actively and steadily deleveraging,the leverage ratio of non financial enterprises is high,and it is important to reduce the leverage ratio of enterprises as the top priority.On the basis of scholars’ research,this paper closely combines the state of economic and financial development in our country,and applies the analytical methods and tools that are more advanced,and tries to make a progress on the research angle,mathematical model and empirical test in the economic lever of our country.The contents are as follows:First,on the comparison of various accounting methods,the paper makes a reasonable measurement of China’s economic leverage on the bases of decomposing the local financing platform debt into two parts,one is the government’s responsibility and another is of the non financial enterprise.Compared with the economic leverage of the major economies in the world,it is found that since the financial crisis of 2008,the leverage ratio all sectors in our country have been significantly improved;the distribution of the economic leverage ratio throughout the all sectors is extremely unbalanced,the rate of non-financial enterprise sector is high,the residents and the central government are relatively low;The leverage rate of China’s financial sector is generally lower than that of other major economies other than Russia,South Africa and Mexico,calculated by the debt balance issued by the financial sector rather than the currency and deposits.Second,this paper uses filtering method and nonlinear regime-switch model to capture the dynamic changes of China’s economic leverage,and analyzes the economic logic of China’s economic leverage cycle.It is found that since 2008,the short-term volatility of the macroeconomic leverage rate in China has obvious periodic characteristics and structural changes;the periodic waves and the structural changes have a clear economic logic.Third,through the sub-sector analysis of China’s economic leverage,we found that among 2007-2016,the economic leverage ratio of all sectors in China showed a significant rising trend,the leverage gap of the residents and non-financial enterprises has a large amplitude of fluctuation before 2012,converges among 2013-2015,and in 2016 there was another large amplitude of fluctuation;The leveraging gap of government and financial sectors has a big change in the year of 2009-2014,the other periods smaller;the high leverage growth rate of each department often occurs before 2010.In the change of macroeconomic leverage ratio in China,the leading role is non-financial enterprise and the residential sector,followed by the government department.From the proportion of the total macroeconomic leverage ratio in China,the economic leverage ratio has shifted from non-financial sector to residential sector,from central government to local government.The VAR model analysis shows that the leverage ratio of the financial sector in our country is endogenous variable in the system,and the leverage ratio of the financial sector departments have significant influence on the fluctuation of the total macroeconomic leverage ratio and non-financial enterprises.The total leverage,residential leverage and non-financial leverage have a significant impact on government sector leverage.There is a long-term stable equilibrium relationship among various departments’ leverage ratios.The are positive and negative responsive of total leverage to a exogenous shock,but the negative is small and the cumulative responsive is positive.Fourth,through the theoretical simulation of the DSGE model,it is found that the reverse periodicity of cyclical fluctuation of China’s economic leverage and economic output is consistent with the implementation logic of our country’s economic policy;It is the result of the demand-side management of China’s macro-economy.Under the constraints of "deleveraging" and "steady growth",the traditional demand-side management policy,such as increasing the capital adequacy ratio and deposit reserve,is no longer effective.It can maintain a moderate economic growth target through the supply-side reform to achieve the goal of "deleveraging",the paper puts forward some measures to adjust the economic leverage of our country,including rebalance of debt structure and the structural of supply-side.From the perspective of leverage cycle and on the basis of reasonable measurement of China’s economic leverage rate,this paper thoroughly analyses the cyclical change characteristics of China’s economic leverage,clarifies the economic logic of the time series change of China’s economic leverage and the change of interdepartmental relations,studies the mechanism between macroeconomic variables by simulation analysis of DSGE model,and probes into the policy choice of China’s economy under the constraints of "deleveraging" and "steady growth",and puts forward some policy suggestions for adjusting China’s economic leverage.This is a complete analytical framework and a completely new research perspective.Based on the comparison of various accounting methods,and in line with the spirit and specific methods of the central government of our country on dealing with the debt problem of local financing platforms,this paper divides the debt of local financing platforms into one part of the government responsible for repayment and another part belonging to the debt of non-financial enterprises,and makes a reasonable measurement of the economic leverage of our country.The paper has provided a good supplement to the existing research in the accounting of economic leverage ratio in China.In the analysis of cyclical changes of variables and macroeconomic analysis,this paper adopts Markov regime switch model and DSGE model,which are the mainstream research tools and the literature of which to study economic leverage is relatively rare.