Research On The Relationship Between Money Supply And Economic Growth

The relationship between money factor and economic growth is considered as one of the most challenging subjects in contemporary economics. There is only one form of all assets before monetary theory generated. In order to compensate the flaw, some of economists raise the monetary theory of economic growth. They regard that during the course of economic growth, money be able to affect the degree of economic growth once the income of money eventually influences consume and saving.,In the economical theory field of our country, there are have different ideas. From the appearance, the diverge come from the outcome that who is the reason and who is the result. In fact, the difference is the how to expert the function of money. To get the truth and integrate the different ideas, by studying the statistics from 1953 to 2001,there have a conclusion that the length and the trend of period are similar. During the 48 years, by the standard of 10%, there are six periods to money supply and economic growth and the periods are correspondence, especially the period of money lag the period of economic growth one year. To fully reveal the relationship between money supply and economic growth, we carry on the regression analysis based on the correlation coefficient, regression analysis prove the hypothesis that the wave motion of monetary is the result of the fluctuating of economic growth. If we think about the change of the economic mechanism, the development of the relationship goes through three stages. In the three stages, reason and result are unfixed. The differences of the controlling of money supply and the forming of the principal and the development can express the reason.Based on the above analysis, there is an advice that the government should carry out and insist on a consistent rule of money supply all the time. The increase rate of money supply ought to be respectively confined to a reasonable objective scope.