The Analysis Of The Endogeneity Of China's Money Supply

Monetary policy means that Central Bank uses some certain tools to act on some economic variables to achieve a specific economic target. Generally, the intermediate tool of monetary policy includes two options: money supply and interest rates. If a country's money supply was exogenous, monetary policy using money supply tool is effective, central bank can adjust the money supply to adjust the macro economy; Conversely, if the money supply is endogenous, the monetary policy authorities will be unable to influence its money supply effectively, so that an attempt that the monetary policy authorities adjust money supply and then adjust the macro economy through monetary policy of money supply is ineffective. Now under the condition of the inefficacy of monetary policy, the research on the endogenity of our country's money supply is meaningful.First, this paper reviews the research on the endogenous money supply theories. About the Early endogenous money supply theory, we review the Radcliffe Committee's view, Gurley and Shaw perspective, the perspective of Tobin in turn. After the 1970s, the perspective of endogenous money supply has great developed by the Post-Keynesian. Its core perspective is that: the money supply is endogenous, is credit-driven and demand-determined. However, in some views, different schools have different views. Generally speaking, Post-Keynesian has three different perspectives on endogenous money supply theory, the adaptability perspective, structure perspective and liquidity preference perspective. This paper analyzes and interprets these three views.