The Balance,measurement And Regulation Of Liquidity Supply And Demand In The Scope Of Total Assets

One of the main purpose of people focus on and research liquidity is to explain the relationship of the monetary policy and the economic situation,which is important reference to monetary policy decision-making and then to the economic adjustment.Because of the close relationship between liquidity and monetary policy,a mainstream view and direction of Liquidity Research is aroud money supply,monetary base and money multiplier,which is as known as the "old view".On the other hand,research of generalized liquidity has been paid more and more attention,especially in the economic disordered period,during which the ability of money supply to explain and control the economic situation is getting lower and lower,the money supply can not accurately predict the economic and financial crisis or solve the problem.Some scholars believe that generalized liquidity is the main decisions of the economic situation.This view is called "the new view".Although people have done some theoretical research on generalized liquidity,there are two difficulties of this research : first,there's a lot of dispute about the liquidity concept and definition,scholars haven't come to an agreement;second,liquidity is difficult to quantify therefore lack of empirical evidence.So,more in-depth study around liquidity is needed.In this paper,liquidity is defined as the sum of money and all other kinds of assets which are willing to be and able to be transformed into the ability to pay at a certain time.The quantity of liquidity equals the sum of money and all kinds of assets weighted by liquid coefficient.Under this definition,the paper firstly analyzes the decision of liquidity supply and demand,then analyzes the change of liquidity during various deals under two framework,the first is financial assets and the real assets,the second is the real economy,fictitious economy and financial market.In the part of analysis of liquidity equilibrium,this paper established a framework of 5 departments:the stock liquidity,liquidity flow,real economy,fictitious economy,and financial market.The principles and rules of liquidity equilibrium is dynamic equilibrium ofliquidity supply and demand,liquidity flow effects the economic operation,part of the assets take part in deals but change the liquid coefficient of all the same kind of assets,the adjustment speeds of the 3 departments are not the same(financing market faster than the virtual economy and faster than the real economy).Through the liquidity equilibrium process analysis,the paper summarizes the promoting mechanisms are :the investment demand for liquidity is negatively related to interest rate(expected return),adjustment mechanism of asset structure,the consumption and investment mechanism,the adjustment of fund flow into the virtual economy and real economy;the uncertainty mechanisms are : income factors,debt adjustment mechanism,the uncertainty expected return of fictitious economy assets,the uncertainty of the interest rate,the uncertainty of the real economy price.Then we analyze the exogenous factors that can regulate the liquidity.In the part of empirical analysis,we put forward a hypothesis : the liquidity effects the financing market,fictitious economy,real economy with different speeds and cycles like the water wave,also effects the the main economic variables such as price level,interest rates,asset structure etc with different speeds and cycles.Therefore,the variables with shorter lag and less interruption can be used to reflect the liquidity situation indirectly,and forecast the variables with longer lag,such as the real economic price.Then we establish two kinds of indicators to measure liquidity situation,which are asset structure and term structure of interest rates.The asset structure index includes currency fluctuations,currency structure fluctuations,the proportion of short-term assets,the term structure of interest rate index is the U.S.long-term bond yields and short-term bond yields deviation.The empirical analysis using the US' and Chinese data shows that the indexes especially the proportion of short-term assets(wealth)have a stable and trustable relationship with CPI.So they can negatively reflect the liquidity situation of supply and demand.Finally,the paper analyzes the Regulation of liquidity supply and demand.Liquidity is a more endogenous concept,but also be affected by external factors,such as the monetary policy,fiscal policy,social expectations,transaction costs and so on.Because the import impact to economy of liquidity and the extensive factors involved,the paper suggests that we should analyze the economic situation from the total assets liquidity perspective,monitor liquidity supply and demand situation from the total assets liquidity connotation,regulate and supervise macro-economy from the framework of the total assets liquidity.We recommend that the liquidity regulation isnot only related to the current monetary policy tools,but also involves the regulation of assets' liquid coefficient,anticipation regulation,different regulation to the real economy and the fictitious economy,establish regulatory framework from the whole assets liquidity,and so on.