The Impact of Macroeconomic Fluctuations on Stock Exchange Markets： A Comparative Analysis on CEECs

Stock exchange market responses to macroeconomic fluctuations show deviations between countries in terms of direction, magnitude and duration due to the idiosyncratic characteristics of the countries. The paper empirically searches for the identification of these variations for CEECs, namely Czech Republic, Hungary, Poland, Slovak Republic and also Turkey for the period of December, 1999 to December, 2009. The empirical analyses demonstrate that for each CEEC, stock exchange market responds positively to industrial production and to appreciation of local currency. Czech Republic and Hungary display negative and the rest display positive response to M1, whereas the response of stock market to CB policy rate shows mixed results for each country. Besides, foreign exchange market returns are found to be the variable with the highest significance in explaining the stock exchange market returns. These findings point out to arbitrage opportunities for investors and give insight to Monetary Policy Authorities about the Monetary Transmission Mechanisms of the countries.

Mixed Monetary-Fiscal Policies and Macroeconomic Fluctuations:An Analysis Based on the Dynamic Stochastic General Equilibrium Model

The existing literature on macroeconomic policy research is mainly concerned with the impact of a single monetary or fiscal policy on China 5 macroeconomic fluctuations in a closed economy.However,the effect of a mix of monetary and fiscal policies has been neglected.This paper addresses this issue with an open economy dynamic stochastic general equilibrium model.It applies impulse-response and welfare analyses to explore the stabilization effect of various mixes of monetary and fiscal policies.The results show that the optimal monetary policy and fiscal policy mix varies in different cases.When government spending shocks happen,the aggressive fiscal policy and passive monetary policy would be the best choice.In contrast,for domestic interest rate shocks,foreign interest rate shocks,and foreign consumption shocks,the passive fiscal policy and aggressive monetary policy are more applicable.This article explains China's economic fluctuations and highlights the importance of mix of monetary and fiscal policies in the face of different shocks.

Is economic policy uncertainty a major fluctuation factor?Based on a new mixed identification method

To investigate to what extent economic policy uncertainty affects China’s macroeconomic fluctuations,we construct a mixed identification scheme that combines some regular sign restrictions with zero restriction in a SVAR model,aiming to simultaneously identify economic policy uncertainty shocks and the three conventional structural shocks of demand,supply and monetary policy.The research shows that(1)economic policy uncertainty shocks,though not the major factor for economic fluctuations in China,exhibit characteristics similar to those of negative demand shocks with inflation effect obviously stronger than output effect;(2)in the full sample period,demand shocks are the primary driving factor for China’s economic fluctuations,followed by supply shocks;(3)supply shocks are the most important driving force behind inflation and monetary policy adds fuel to the flame,while economic policy uncertainty shocks exert obvious inhibition on inflation.The academic contribution of this paper is showing some robust empirical facts of economic policy uncertainty’s effects on macroeconomic fluctuations from the biggest developing country,and the policy implication of our research is to provide academic support for the decision of“macroeconomic policies should remain stable”.

What Caused the Sharp Downturn in the Chinese Economy during the Global Financial Crisis? A Critical Note on Causality in Trade Linkage

In responding to a view that attributes sharp downturns in the Chinese economy in late 2008 and early 2009 to the ＂collapse of external demand,＂ the present paper scrutinizes three relevant issues： How have large Chinese importers behaved in a demand-price setting？ How have Chinese commodity imports and exports interacted in recent years？ Did the downturns in China＇s export growth come earlier and were they deeper than those in Chinese import growth？ All answers appear to suggest a conclusion contrary to the abovementioned view： sharp downturns in China＇s trade and economy during the reeent global financial crisis were, to a large extent, caused by certain domestic factors, or by factors that should not be regarded as entirely ＂external. ＂ Insomuch as globalization has advanced, a large economy like China＇s today faces new potential sources of macroeeonomic disturbances, from inside and outside.