Research On The Employment And Real Economy Development Under Credit Shock

A large number of studies show that credit supply expansion is closely related to the macro economy.The demand side of credit includes firms and households.Credit supply expansion can affect economy by increasing firm’s productive capacity or by boosting household consumption demand,the impact of credit expansion on the macro economy may vary depending on whether it stimulates the production capacity of enterprises or household demand.However,some scholars focus on how credit supply expansion improved the allocation of resources and production capacity,but they are largely silent on the household demand channel.With the gradual increase in the proportion of household credit scale in recent years,the influence of household credit on macro economy is increasing significant.The thesis aims to explore the effectiveness and importance of household demand channels.By establishing a two-sector open economy general equilibrium model based on household and production sectors,this paper discusses the impact of household and production sector credit channels on macroeconomic indicators(employment and production growth),and uses the conclusions of the theoretical model as the research assumptions of the empirical model.Using the provincial panel data of 22 provinces in China from 2010 to 2019,this paper empirically analyzes the relationship between household sector credit and the ratio of employment and output of non-tradable and tradable enterprises in the production sector,as well as the relationship between the ratio of production sector credit to the ratio of employment and output of non-tradable and tradable enterprises.The main conclusions of this thesis are as follows:(1)Only a household credit supply expansion boosts the nontradable to tradable employment ratio,one can infer whether the credit supply expansion works through the household sector by looking at the response of the ratio of nontradable to tradable sector employment.(2)Household credit supply expansion has greater impact on the nontraded sector,stimulating the nontraded sector employment,output and the price of nontraded goods,while the impact on the tradable sector is limited.While the expansion of enterprise credit has no impact on the strong relationship between the employment and output of the nontradable sector and the tradable sector.indicating the household demand is the main channels of credit supply expansion affect the growth of the real economy.Based on the above conclusions,this thesis puts forward four policy suggestions.