The Construction and Application of Business Condition Index: The Case of China

• Main Authors: Te-Yu Fu, 傅德育
• Other Authors: Jin‑Huei Yeh
• Format: Others
• Language: zh-TW
• Published: 2019
• Online Access: http://ndltd.ncl.edu.tw/handle/77hhe9

碩士 === 國立中央大學 === 財務金融學系 === 107 === In this study, we construct a business condition index to measure the business cycle of China. Through public information, we collect 27 different economic variables from January 2007 to September 2018. According to the characteristics of each variable, we classify the variables into two economic dimensions, which are real economy and nominal economy, respectively. Then, by using principle component analysis, we construct two indices to detect the change of business cycle in different categories. Based on the results of the two indices, we establish a new business condition index of China by using principle component analysis again to determine the weight of each factor. The outcomes show that our indices in different dimensions can truly detect the business cycle in the sample period. Finally, we find the lagged term of business condition index would positively affect the China's gross domestic product. Besides, the aggregate financing to the real economy may be a main reason for the change in the business cycle. These results indicate that the business condition index we construct in this study can be related to the China's future economic status, and the importance of aggregate financing to the real economy should be considered while the government is making the decisions.