The Research On Relationship Between Money Supply And Macro-economy

With China's opening reform and fast development over the recent years, the central bank monetary instrument of monetary policy gradually increased the utility of policy regulation and intensity control. Especially during years from 1997 to 2000, the central bank has been doing almost all the possible way of regulation and control on macro-control instrument, but the impact seemed to be not obvious. In this case, the academic community started evaluating the effectiveness of monetary policy in the nation. Many econoimists are trying to endogenous financial supply from the analytical perspective to solve this problem. In this article, both theoretical and empirical aspects of this problem is described and studied.In theory, the foreign scholars are aware of the currency "exogenous" theory and "endogenous" on the currency of the main points, that is, money is endogenous or exogenous variable variables, analysis of the currency "exogenous" and "endogenous" analysis of the issue is the problem actually whether the central bank can control money supply. The money supply "exogenous" representative persons are Keynes and Friedman, that "endogenous" main representative of the Post-Keynesian from Weintraub, Card and Moore Dole. In addition, the currency also "neutral" theory and "non-neutral" On the points, that is, the volume of money supply changes on macroeconomic variables affecting the actual problem. Neutral theory of neoclassical monetary theory is a typical representative of the quantity theory of money, its representatives Fisher said of the cash transactions and cash balance of Cambridge said. At the same time, Walras presented his theory of general equilibrium. Patinkin through the introduction of "real balance effect", the traditional neoclassical quantity theory of money and Walrasian general equilibrium theory of the combination of amendments to the establishment of a currency-neutral theory. The first non-neutral theory of currency is the Swedish economistWyke Syre, he put forward the theory of accumulation. Cairns in 1935 published the "Employment, Interest and Money" and pointed out that the money really great role in the economy. He pointed out that the currency is no longer a so-called veil, through the interest rate on investment, production, growth occurred in a substantial impact. Over time, the currency "endogenous" theory and "non-neutral" point of view of gradually become the mainstream view, also supported the conclusions of this paper, the two views. Domestic aspects of this has been a lot of empirical research, many scholars more and more attention to the subject, published many articles, created a body of literature, most have reached a similar conclusion.China announced to the public money supply statistics monitoring indicators from a quarterly basis by the People's Bank of China from the third quarter of 1994, make China's money supply indicators into MO, M1, M2, M3 four levels, including M1, M2, respectively, for the narrow money and broad money. Monetary authorities are usually well known to use three tools - open market operations, discount policies and statutory reserve ratio to control base money and the multiplier, the indirect control of monetary supply, and the impact of macro-economic. Open market operations refers to the monetary authorities in the financial market to sell or buy Treasury securities and government agencies, especially the short-term treasury bills to the impact of base money. Discount policy is to refer to the monetary authorities through the changes in their bills held by commercial banks to rediscount the re-discount rate to influence the number of loans and basic money supply policy. Statutory reserve ratio is to control an important tool for currency, when the monetary authorities to raise the statutory reserve ratio, it will expand the money supply; when to reduce the statutory reserve ratio, the money supply will shrink accordingly. In theory, the money supply impact on economic growth there are "to promote the theory" and to "promote inferences" and "neutral theory" point of view of three of them, "the promotion of the point of view, the financial to the central bank borrowing will increase the money supply in circulation, as long as such borrowing for the Government to increase the actual investment and to take certain measures to ensure that private sector investment is not due to an increase in government investment and a corresponding decrease, then increase the money supply of this approach will With the addition of actual investment and promote economic growth.In addition,under normal circumstances, increase the money supply will raise the savings rate and promote economic growth. It is clear that the promotion of a certain point of view is that the increase in money supply will bring about a certain degree of economic growth, I also support this view. The amount of the money supply impact on the price level, no basic differences in theoretical circles, the basic money supply that will increase the price level is bound to lead to the improvement of the empirical analysis the following results to this point of view, with a strong support.In this paper's empirical analysis, The data are China in 1997 - 2008 period of economic growth, money supply and price levels, fixed-asset investment and the Shanghai Composite Index and these data ADF test, Johansen cointegration test, pulse response analysis, as well as the Granger causality test, an analysis of the volume of money supply on the impact of macroeconomic variables, as well as the degree of cointegration between them and causality. The results show that among them there is a long-term stability of the cointegration relationship between money supply and economic growth, investment in fixed assets between the long-term stability of the positive correlation between money supply and real output, fixed assets between the single - Granger causal relationship to the other, the results also show that the money supply and inflation has a strong causal relationship, that is, when to increase the money supply, the price is bound to arouse. The stock market index, as a result of the factors that affect the stock prices of the more complex and not tested by empirical data on the volume of money supply prices on the stock market is very strong, but can be determined basically to raise the volume of money supply in the stock market still has some positive impact effect. Through theoretical and empirical analysis of the results, come to the conclusion: In our country, the currency of a non-neutral features, the volume of money supply on the macroeconomic impact of a strong role for the monetary amount of shows that the central bank's macroeconomic regulation and control an important tool. China's central bank through open market operations, the discount policy and regulatory statutory reserve ratio and other methods to influence the money supply through changes in the money supply to influence the volume of total output, investment and prices, and thus achieve the ultimate goal of monetary policy. Thus we have to increase the volume of money supply control, market-oriented interest rate to speed up the process, clear channel transmission of monetary policy and to focus on monetary policy and fiscal policy coordination in order to adopt a stable and efficient monetary policy, thereby promoting economic health rapid development.