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Modeling the Real-Time Transmission Effects of Economic Policies on Market Liquidity under a Time Series Analysis Framework

By: Xiaotong Liang 1
1China National Gold Group Asset Management Corporation, Beijing, 100010, China

Abstract

Changes in market liquidity are of significant reference value to investors. This paper uses matrix processing of historical financial data to achieve a high-dimensional representation of time series. Combining the preprocessed data, a time convolution-Bayesian neural network (TCN-BNN) model is constructed to process financial time series data. Furthermore, through ensemble empirical mode decomposition (EEMD) and an improved multidimensional k-nearest neighbor (MKNN) algorithm, the financial market situation under changes in economic policy is predicted. The study shows that in the constructed financial time series model, with a time unit of 1 year, the autocorrelation range between financial markets and economic policies is -0.31 to 0.17, and the partial autocorrelation range is -0.23 to 0.18, indicating a high degree of correlation. The uncertainty of economic policies leads to significant fluctuations in financial markets during the 5th to 10th lag periods and time-varying periods.