Abstract：
This paper studies the relation between asset bubble and economic fluctuation in China by using BGG model with asset bubble. First, it introduces BGG model with asset bubble, which forms the system consisting of core variables, such as net asset value, investment scale, asset bubble, etc. Then using statistic data, econometric tool and references, it estimates 22 parameters in the model. Finally, based on the model we discussed, it analyzes economic real fluctuation in China around subprime crisis and makes numerical simulation for the model. The simulation shows that there is larger economic fluctuation in the economy with the bubble than the one without the bubble. The character of economic fluctuation around subprime crisis in China accords with the character of oversold-crash, i.e., asset price is lower than its value during crash. The monetary policy which is focusing on asset bubble could avoid the economic fluctuating substantially, but its ability to deal with negative output fluctuation in crisis period is weaker than dealing with the positive output fluctuation in bubble period. Positive financial policy could lower the effect caused by the negative shock; but the excessive investment stimulation could amplify the economic fluctuation.
CHEN Wei, MA Jun-chi.Asset Bubble and Economic Fluctuation in the Financial Accelerator Framework——An Example in China Around Subprime Crisis[J] Economic Survey, 2017,V34(1): 124-129
2017 
