Economic policy stability, Systemic financial risk, and High-quality economic development

Abstract

Abstract: The economic policy stability is crucial for preventing and mitigating systemic financial risk and promoting high-quality economic development; thus, the characteristics and strength of their interactions deserve in-depth research. By employing a TVP-VAR model, this paper investigates the dynamic relationships among economic policy stability, systemic financial risk, and high-quality economic development in China during the period from the first quarter of 1997 to the fourth quarter of 2022. The findings indicate that, from the perspective of the overall effect, economic policy stability positively influences high-quality economic development in both the short and long term, exhibiting time-varying characteristics. Specifically, the short-term positive effect strengthens over time, while the long-term positive effect gradually converges. Regarding the risk transmission channel, economic policy stability tends to initially exacerbate systemic financial risk in the short term but mitigates it over the medium to long term. Conversely, an increase in systemic financial risk may initially stimulate but subsequently restrain high-quality economic development.This study addresses the shortcomings of previous analyses that rely on static models with a single-path perspective, providing empirical evidence and policy implications for deeply understanding and managing the interrelationship among these three factors.

Key words: economic policy stability, systemic financial risk, high-quality economic development, TVP-VAR

CLC Number:

F832.5

HE Zhixin, HE Jian, LIU Yu. Economic policy stability, Systemic financial risk, and High-quality economic development[J]. Journal of Guizhou University of Finance and Economics, 2025(05): 10-20.

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