Design of Financial and Economic Cyclical Model and Validation of Domestic Economic Effects

Financial economic cycle theory is the latest development in the field of economic cycle theory at the forefront of the hotspot. In this paper, credit, financial leverage, real estate asset prices, and stock asset prices are selected to measure financial cycles, gross domestic product (GDP) is used to measure gross national output in China, and consumer price index (CPI) is used to reflect the total price level, and the year-on-year growth rate of the above indexes is taken as the corresponding proxy variables, to design a financial economic cyclical model. The model is calibrated based on the quarterly data of the real Chinese economy from 1992Q1 to 2011Q1, and the effect of the model fitting the real Chinese economy is investigated.