Economic academic papers Challenge Cup Op.2.
Virtual economy, bubble economy and real economy
Fictitious economy is the product of highly developed market economy and an indispensable part of modern market economy. The development of real economy and the improvement of operating efficiency of economic mechanism are closely related to the expansion and development of virtual economy, but the excessive expansion of virtual economy will lead to bubble economy and damage the development of real economy. In recent years, in the process of financial liberalization in newly industrialized countries in Latin America and Southeast Asia, the virtual economy has expanded excessively, leading to a serious bubble economy and a series of financial crises, which not only caused great damage to the economic development of the countries concerned, but also had a great impact on the world economy; Even in developed countries, there are many hidden dangers of bubble economy. After Japan's bubble economy burst, it has never resumed growth. The bubble accumulated in the American economy has made people in the global economic circles uneasy. How to prevent the excessive expansion of virtual economy from leading to bubble economy has become a hot spot in the field of international economics. At present, China is in a critical period of financial system reform. After joining WTO, the financial service industry will be forced to open to the outside world, and the process of financial liberalization and financial deepening will be accelerated day by day. In order to give full play to the role of financial deepening in promoting China's economic growth, and to prevent the virtual economy from over-expanding in the process of financial deepening, causing bubble economy problems, it has become a top priority to study relevant mechanisms.
First, the significance
The real economy refers to the economic activities of producing and selling material products and spiritual products and providing related services, including not only the material production activities such as agriculture, energy, transportation, posts and telecommunications, construction, but also the production and services of spiritual products such as commerce, education, culture, art and sports.
Virtual economy refers to the holding and trading activities of virtual capital relatively independent of the real economy. Virtual capital is the product of credit system and currency capitalization in market economy, including bank credit, bills and drafts due to credit, securities such as stocks and bonds, property rights, property rights and various financial derivatives. With the continuous development of market economy, the degree of social division of labor and specialization is improved, the degree of economic monetization is deepened, the proportion of financial activities in the total economic activities is increasing, and the degree of financial deepening is increasing, resulting in a large number of capital securitization and financial derivatives innovation. Due to a large number of speculative activities and financial derivatives transactions in the securities market, the trading volume of the financial market and the output value of the financial activities themselves have increased rapidly, forming a virtual economy with an expanding scale.
Bubble economy refers to the rapid expansion of the prices of long-term assets such as stocks and real estate caused by the excessive expansion of virtual economy, which is a false prosperity phenomenon of the whole economy formed by the growth rate of virtual economy exceeding that of real economy. Its formation process is that one or a series of assets suddenly increase in price in a continuous process, and the expectation of price increase attracts a large number of new buyers. These new buyers generally only want to get the difference and profit through speculation, but are not interested in the actual use value or profitability of the assets they buy and sell; Due to the continuous involvement of new buyers, prices are rising, forming a bubble economy phenomenon; Once the expectation of price increase is reversed, the price plummets and the bubble bursts, it will trigger a financial crisis and lead to the whole economic recession. Famous cases of bubble economy in history include tulip bubble 1636 in the Netherlands, Mississippi bubble 179 1- 1720 in Paris, south sea bubble in London, etc. Typical cases of bubble economy in recent years include financial crises in Latin America, Southeast Asia and Japan.
When discussing bubble economy, we should strictly distinguish between bubble economy and economic bubble, and bubble economy is not equal to economic bubble. Economic bubble refers to the imbalance phenomenon that often occurs in the process of economic development, which is reflected in the ups and downs of the economic cycle. The main difference between the two is that the market mechanism will balance the economic bubble. No matter how fast, there will always be an equilibrium point under the action of the market mechanism, which is highlighted by the rise in prices and the decline in demand. But the market mechanism is powerless to the bubble economy, because there is no such equilibrium point in the bubble economy. The outstanding performance is that the price rises, the demand rises, and the market is full of speculative atmosphere. The operation of bubble economy does not follow the basic operating principles of the market, which is a special case of market failure. 1846-1847 British railway frenzy,1919-1920 London and new york stock and commodity prices soared and plummeted,1920-1920.
Second, the characteristics of the virtual economy
Virtual economy is the product of highly developed market economy, and its ultimate goal is to serve the real economy. With the rapid development of virtual economy, its scale has surpassed that of real economy, and it has become an economic category relatively independent of real economy. Compared with the real economy, the virtual economy has obviously different characteristics. To sum up, it is mainly manifested in four aspects: high liquidity, instability, high risk and high speculation.
1, with strong liquidity. It takes time and space to realize real economic activities. Even in today's highly developed information technology, it takes some time from production to demand. But virtual economy is the holding and trading activity of virtual capital, and it is only the transfer of value symbols. Compared with the real economy, it is highly mobile. With the rapid development of information technology, virtual capital such as stocks and securities is paperless and electronic, and its transaction process is completed in an instant. It is the high mobility of virtual economy that improves the efficiency of social resource allocation and redistribution, making it an indispensable part of modern market economy.
2. unstable. Virtual economy is more unstable than real economy. This is determined by the virtual economy itself, which has its own virtuality, which makes the price determination of various virtual capitals in the market transaction process not follow the law of value like the price determination process of the real economy, but more depends on the subjective expectations of the virtual capital holders and transaction participants for the future rights and interests, and then depends on many non-economic factors such as macroeconomic environment, industry prospects, politics and surrounding environment, which increases the instability of the virtual economy.
3. High risk. Because there are many factors that affect the price of virtual capital, these factors change frequently and impermanently, and do not follow certain laws. With the rapid development of virtual economy, its transaction scale and variety are constantly expanding, which makes the existence and development of virtual economy more complicated and difficult. Non-professionals are limited by professional knowledge, information collection, information analysis ability, funds, time and energy. Virtual capital investment has become a high-risk investment field, especially.
4. Highly speculative. Although the trading of virtual capital such as securities, futures and options can be used as investment purposes, it is also inseparable from speculation, which is determined by the needs of market liquidity. With the rapid development of electronic technology and network high technology, the transfer, liquidation and virtual capital transaction of huge amounts of money can be completed in an instant, which creates technical conditions and provides technical support for the high speculation of virtual capital. The more emerging and immature the market is, the worse the market supervision ability is, the worse the measures and efforts to prevent and deal with highly speculative behaviors are, the more speculative the virtual economy is, and the easier it is for speculative hot money to patronize such markets, so as to achieve the goal of making huge profits through short-term speculation.
Third, the internal relationship between virtual economy and real economy.
Fictitious economy and real economy are two relatively independent economic categories, which depend on and restrict each other. The emergence of virtual economy stems from the internal demand of the development of real economy. No matter how fast and large the virtual economy develops, it basically serves the real economy, which is the basis of its existence and development. Without the real economy, the virtual economy is impossible, that is, the real economy is the first and the virtual economy is the second. At the same time, the development of the real economy is inseparable from the virtual economy. Financial instruments such as money, funds, electronic money, stocks, bonds and ABS in the virtual economy have penetrated into all aspects of the real economy. The normal operation and rapid development of the real economy can not be separated from the support of the virtual economy, and the backward virtual economy will become an obstacle to the rapid development of the real economy.
However, we should see that the development of virtual economy must adapt to the development of real economy. The advanced development of virtual economy can not drive the excessive development of real economy, but will lead to bubble economy, and the bursting of bubble economy will lead to financial crisis, which will cause great damage to the development of real economy. Many economists, such as Edwards. Xiao believes that the contribution of financial activities to economic growth increases with financial deepening, so they advocate promoting economic growth through financial liberalization and financial deepening. But the fact of economic development shows that this proposition is one-sided. Since the 1980s, western developed countries have successively realized financial liberalization, the degree of financial deepening has been continuously improved, and the total financial assets have expanded rapidly, which has now greatly exceeded their GDP. However, with the rapid expansion of financial assets, GDP has not increased rapidly, but the growth rate has declined. In addition, it also triggered the currency crisis in Europe in the 1990s and the serious bubble economy phenomenon in Japan. Many developing countries, such as Thailand and Malaysia, implemented financial liberalization in the middle and late 1980s, the degree of financial deepening increased rapidly, the expansion speed of virtual economy exceeded that of developed countries, and the phenomenon of economic bubble became increasingly serious, which triggered a series of financial crises. With the continuous improvement of global economic integration and financial integration, these financial crises not only caused great damage to the domestic real economy, but also had a great impact on neighboring countries and even the whole world economy through international trade, exchange rate changes and capital flows, forming a regional or global financial crisis.
Four, the function of the virtual economy and its influence on the operation of the real economy
Virtual economy has a great impetus to the development of real economy. On the one hand, financial liberalization and financial deepening can not only improve the allocation efficiency of social resources, but also improve the operational efficiency of the real economy; Moreover, the hedging services provided by capital securitization and financial derivatives also provide a stable operating environment for the real economy, reduce the operating costs of the real economy and the uncertain operating risks brought about by price or exchange rate fluctuations, and enable the real economy to grow steadily. On the other hand, the increase of the output value of the virtual economy itself promotes the growth of GDP, and the development of the virtual economy provides a large number of employment opportunities, which directly promotes the rapid development of the tertiary industry. Specifically, the promotion of the virtual economy to the real economy is mainly reflected in the following four aspects:
1 helps to improve the allocation efficiency of social capital. The basic function of financial market is to realize the optimal allocation of capital among different real economic sectors. The price discovery function of financial market-the equity price represented by the discovered virtual capital is the main inducement tool to realize the optimal allocation of incremental capital among all sectors of the real economy. Through the issuance and trading of virtual capital, issuers such as enterprises can obtain the funds needed for development in time and in full, and promote the rapid development of excellent enterprises. At the same time, enterprises that have obtained social funds have the obligation to improve the transparency of their operations and accept the supervision and review of virtual capital investors. Through the power of the market, we can automatically adjust the flow of funds, let social capital flow to industries and enterprises with good prospects, great development potential, good operating efficiency and standardized management, and let enterprises with no future die for lack of funds, thus improving society. At the same time, the financial market also provides an effective way for the optimal allocation of stock capital. Through property rights transactions such as asset reorganization, the optimal allocation of stock capital among different real economic sectors will be realized again, and the stock capital that is idle due to investment decision-making mistakes or changes in market demand structure will be revitalized to improve the utilization efficiency of social capital. In this regard, a convincing example is the strong growth of the American economy in the past decade. The sustained and strong growth of American economy is related to technological progress, changes in labor market structure and successful transformation of economic structure, but the huge support provided by venture capital market also plays an equally important role: the venture capital market provides sufficient development capital for emerging high-tech industries such as American network economy, making it develop rapidly in a short time and becoming an important driving force for the sustained growth of American economy.
2, help to improve the efficiency of the whole economy. First, the virtual economy not only promotes the optimal allocation of social capital, but also promotes the optimal allocation of labor, technology and natural resources among the real economic sectors, making the limited economic resources flow to the real economic sectors with the greatest development potential and improving the utilization efficiency of the whole economic resources. Secondly, the development of stock and bond markets has broadened the financing channels of enterprises and provided important financial support for the expansion of enterprise scale; The innovation of property rights trading methods such as equity swap and holding acquisition provides convenient channels for enterprises to expand at low cost and contributes to the development of social economies of scale. Third, institutional innovation is an important driving force for modern economic growth, and the development of virtual economy is an important source of institutional innovation for enterprises. The history of world economic development shows that the most influential and driving form of enterprise organization is the shareholding system, and the establishment and perfection of the shareholding system can not be separated from the division, setting and trading of equity, which are important categories of virtual economy.
3. It helps to disperse the business risks of enterprises. First, the development of capital market and the innovation of enterprise system make the investors of enterprises diversified and socialized, and at the same time, the ownership, management and benefit rights of enterprise property rights are relatively separated. The transfer and disposal of enterprise ownership weakens the influence on enterprise operation activities and enhances the stability of enterprise operation. Secondly, financial innovations such as asset securitization, ABS (asset-backed securities) and option trading emerge one after another, which have had an important impact on the capital arrangement, investment choice and avoidance of business risks of enterprises. For example, through futures market hedging and foreign exchange swap business, enterprises can effectively avoid the operational risks brought by market price fluctuations and exchange rate changes and reduce their production costs. Third, the price discovery in the futures market reflects the change of supply and demand in the spot market in the future, which is helpful for enterprises to adjust their business strategies in time and choose the correct business direction; The price discovery in the stock market reflects the general trend of economic development, and also helps enterprises to adjust their development strategies in time and avoid investment risks.
4. The expansion of virtual economy not only increases the scale of GDP, but also provides a large number of employment opportunities. While the virtual economy is increasingly playing a huge role in promoting the real economy, the virtual economy itself has also achieved rapid development. Compared with 1980, 1996 showed an exponential growth in the total financial assets of major western industrial countries and newly industrialized countries, especially those in Asia, which promoted the development of related service industries and became one of the important driving forces of economic development in various countries.
1980- 1996 financial assets of major industrialized countries and newly industrialized countries
1980-65438+1Changes in the added value of services in major industrialized countries and newly industrialized countries in 1996 (1995 constant dollars)
1980- 1996- (%) Changes in the proportion of service industry added value to GDP in major industrial countries and newly industrialized countries
Source: World Bank Data Processing Center.
Verb (abbreviation of verb) the relationship between virtual economy and bubble economy
The promotion of virtual economy to the real economy is realized by effectively converting savings into capital needed for the development of the real economy. However, the development of virtual economy and speculative activities always exist. The high efficiency of capital allocation provided by virtual economy depends on the high liquidity of virtual capital, which is realized through speculation. The hedging functions provided by the virtual economy, such as hedging and foreign exchange swap business, are also shared by speculators. Compared with the real economy, the virtual economy has the characteristics of high risk and high return, and it is easy to attract a large amount of funds to stay in the virtual economy for speculation, and excessive speculation will lead to excessive expansion of the virtual economy and form a bubble economy. From the experience of Japan, Southeast Asian countries and Mexico and other Latin American countries, the bubble economy is the direct result of the excessive expansion of the virtual economy, but it is also closely related to the real economy. The factors that triggered the bubble economy can be summarized as follows:
1, monetary policy mistakes and improper financial supervision are the institutional factors that produce bubble economy. In the case of unfavorable financial supervision, low interest rates and excessive money supply will make a large amount of funds flow into areas that are prone to bubble economy, such as stocks and real estate, which will lead to rampant speculation and trigger a bubble economy. For example, during 1982- 1985, Japan's money supply was very stable, its economy grew steadily, and its foreign trade surplus was large, which led to the appreciation of its local currency; Moreover, due to the high savings rate of Japanese residents, banks have a lot of surplus funds. In order to maintain the strong momentum of economic development, the Bank of Japan, while adhering to the zero interest rate policy, has repeatedly relaxed monetary policy and increased the money supply. 1990 Japan's money supply (M2+CD) exceeded 1987- 1990. The Bank of Japan actively provided loans to real estate developers, and the loans to real estate between 1985- 1987 increased by more than 20%. Because a large number of new funds did not invest in the real economy, but flowed into the stock market and real estate market, speculation became increasingly rampant, and Japan's economy was rapidly bubbled: the Nikkei 1985 12000 points, 1986 began to rise sharply, and by the end of 1989, it had exceeded 39,000 points. Japan's land price rose from 1980 and 100 in 1985 to 154 and 1990 to 626, and Japan's land area was only 370,000 square kilometers. According to the market value at that time, the total land value of Japan has reached 65438+. Japan's bubble economy is closely related to the mistakes of its monetary policy.
2. The excessive credit expansion of banks and other financial institutions, the low quality of financial assets, and the existence of a large number of bad debts and bad debts are important reasons for the bubble economy. Driven by the pursuit of high interest rates, banks and other financial institutions have relaxed financial supervision and financial review, excessive expansion of bank credit, lack of necessary feasibility studies on a large number of credits, and very weak mortgage means for loans. Many loans are mortgaged with overvalued stocks and real estate. When the bubble economy burst and the value of stocks and real estate returned to their reasonable prices, the stocks, real estate and other collateral mortgaged in banks and other financial institutions shrank sharply, not only the high interest could not be recovered, but also the due loan principal was difficult to recover, resulting in a large number of bad debts on the books of banks and other financial institutions, and the quality of financial assets was low. When the general public loses confidence in banks and other financial institutions, there will be a squeeze, which will lead to a liquidity crisis in banks and other financial institutions, which will lead to a financial crisis. For example, the ratio of bad debts of Thai banks to total bank credit was 9.8% in 1996,1.9%, and 1997 rose to1.9%. 1In August, 1997, international credit rating agencies thought that 25% of Thai financial loans could not pay interest. A large number of bad debts in the banking system have seriously distorted Thailand's financial system, accumulated huge financial risks and triggered a financial crisis.
3. In developing countries, when the real economy is weak and structural problems are prominent, the excessive opening of financial markets will lead to the excessive expansion of virtual economy and trigger a bubble economy. After 1970s, Latin American and Southeast Asian countries experienced rapid economic growth and became newly industrialized countries. Misguided by the theory of financial deepening, these countries have opened their financial markets in succession, trying to stimulate the sustained and rapid growth of the real economy through complete financial liberalization and the rapid development of the virtual economy; However, due to the low level of development of the real economy and many structural problems, the rapid development of the virtual economy exceeded the internal demand of the development of the real economy, which eventually triggered a bubble economy and led to a series of financial crises. Take Thailand as an example. Thailand's industrial infrastructure is backward and construction funds are scarce, and its exports are mainly resource-based products rather than capital-intensive and technology-intensive products. Although the Thai government has invested heavily and focused on the development of heavy chemical industry and high-tech industry, the restrictions of education and scientific and technological level have seriously restricted Thailand's economic restructuring and industrial upgrading. In the case of serious structural problems in the real economy and low level of financial supervision, the Thai government has implemented a series of radical reform measures in fiscal policy, monetary policy and foreign exchange management, which has accelerated the pace of financial liberalization and opening up, making the development speed of virtual economy greatly exceed that of the country's real economy, especially the massive inflow of short-term foreign capital, in which investment in real estate and stock market speculation rather than real economy has made the bubble phenomenon of Thai economy increasingly serious and become the fuse of the financial crisis in Southeast Asia.
During the period of 1980- 1996, the financial assets of newly industrialized countries in Asia accounted for the gross domestic product.