Abstract: Understanding the linkage between the financial system and the real economy and the impact of the cyclical fluctuations in the financial market on the real economy can help prevent and resolve financial risks and promote economic growth Based on the time-varying co-integration model and the non linear Granger causality test this paper, from a dynamic perspective, proves that the financial market is not independent of the real economy; from the three dimensions of overall level, growth trend and cyclical fluctuation, the NARDL model and dynamic multiplier response graph are used to deeply analyze the mechanism of the financial condition index FCL on the real economy from the short-term, long-term and sustainability aspects. The study found that although the development of the financial market can drive the real economy. it is not the source of economic growth and cannot lead to fundamental changes in the economic growth trends the short-term or temporary deterioration of the financial market has a significant negative impact on the real economy. However, in the long run, this effect docs not last. If the financial market conditions continue to deteriorate and form a significant downward trend, it will hinder the long-term growth of the real economy.

Keywords: financial market; independence; real economy; asymmetric effect; time-varying co-integration model; NARDL model