The Research On China's Stock Market Wealth Effect

The wealth effect in stock market means that the change of the stock market value will lead to the change of residents is expenditure while other conditions remain unchanged. The focus of this paper is to prove whether there exists wealth effect in China's stock market or not through empirical analysis. In Chapter 1, we argue that the research on wealth effect is of great importance in the improvement of the economic prediction accuracy and the monetary policy mechanisms. In Chapter 2, we survey the literature in the field.At the chaper3, using lifecycle model, we conclude that wealth effect does not exist significantly in China's stock market. Then we try to explain this phenomenon from two perspectives, the direct factors and the political economics factors. Direct factors such as excessive governmental intervene; lagged legal system, unhealthy firm governance and small scale of stock market caused the lack of wealth effect. In addition, the incomplete transformation of governmental function which can not effectively separate administration management and economic function is also the reason for the unapparent wealth effect in china is stock market. What is more, as capital market is developing day by day and its affection on daily life is becoming more and stronger, the above-mentioned stock market does not exist significantly wealth effect will disappear gradually; the stock market will be more and more important in the national economy. With the stock market developing, the conduction of the capital market is more and more important to monetary policy. The domestic and international fulfillment has already prove If a country monetary policy did not bring the capital market into it to operate the visual field, The monetary policy effect will gradually decrease. The conduction of the monetary policy adopts the form of the wealth effect by stock market, Will be advantageous to the monetary policy effect exertive. Along with the economic system various reform of continue to turn deeply, For the sake of better exertive monetary policy to economy of regulate the function, The stock market that becomes the monetary policy conducts the outlet to have the very and important reason.