Research on relationship between Shanghai Security Composite Index and macroeconomic variables based on path analysis

The main purpose of this study is to reveal the regularity of the interaction between Shanghai Composite Index and macroeconomic variables. The method used in the study is the path analysis in structural equation modeling. The results show that the consumer price index and industrial production value added (lag two) are the observable exogenous variables. Money supply, savings deposits of urban and rural and Shanghai Composite Index are observable endogenous variables. There are not only direct influences but also indirect effects among these variables. Through research, the authors obtained valuable data and analyzed the model combined with the history of China´s economic development.