The Velocity Of Money In The Economic Transformation In The Study

Velocity of money, which is ratio of output or exchange number to money and links real economy with financial economy, has been a significant topic of money economics. The dissertation will analyze the velocity during Chinese economy transition, by exerting the way of institution analysis and economitrics, through money demand for money, supply of money and monetary policy.At first, we analyze the characteristic of velocity during the economy transition, mainly by applying the regression and elastic. The results are that: Velocities of MO, Ml and M2 all decrease, but the velocity of MO is the highest, which implies that the resident holds less MO than Ml and M2; The trend of the velocity is decreasing from the starting date, while the down extent is becoming less and less; The velocity is applicable to the economy circle; The income elastic of demand for money is up to one, this supports the above view; The comparative analysis of velocity among countries shows that velocity of China is lower than other countries, singleness of the structure of financial asset and high saving rate is useful for explaining this difference.This dissertation will continue to analyze the institutional cause for the decline of velocity. In order to lay out the institution factor, we plot out three different periods. During the first period, institution factor of velocity declining are monetization process, price and interest rate limit, and compulsive saving. During the second period, institution factor of velocity declining are distortion of investment and financing system, bad asset of banks, and invalid output. During the third period, institution factor of velocity declining are the transformation of money structure, money sedimentation of capital market, and the down consumption incline.After the institutional analysis, this dissertation also quantificationally analyses the cause of velocity declining. The analysis process includes Granger Cause Test, Unit Root Test, and Cointegration analysis and so Error Correction Model. The results imply that the main causes of down velocity are economy monetization, financial development degree, saving rate and interest rate. From the whole state, financial development degree and real interest rate is positive correlation with velocity, while economy monetization and saving rate is negative correlation with velocity. Of course, degree of influence of every factor is different to the velocity.The review of the velocity can expand from the money equilibrium, that is about demand for money and supply of money. That from the view of demand for money...