Macro-Liquidity Imbalance Research Of China

The problem of excess liquidity in China had drawn great attention from the society because of the significant increase of real estate price in the beginning of 2003 and the sudden rise of stock price in 2005, in the beginning of 2007, the problem of excess liquidity was first included in the government work report. But since the September of 2008, economy situation at home and abroad has varied, the financial crisis and domestic natural disasters make the problem of excess liquidity pressure has been reduced, but governments of some countries inject a lot of liquidity into the market means that inflationary pressures exists in the future.The research of liquidity condition has important significance today since the liquidity condition changes frequently .We can gain a deeper understanding of the liquidity condition of China by mastering the cause and influence of liquidity imbalance .Then we can recognize the formulation and implementation of our country's macro-economic policy more clearly, and give some advice and suggestion for the economic policy, and be able to give some advice and recommendations for our country's macro-economic policy in the new economic situation.The paper includes five chapters to introduce the current liquidity condition of China. In the first chapter, we give the concept of liquidity and make a brief review of domestic research of liquidity condition in the last few years; In the second chapter, we analyze the imbalance condition of China liquidity, elaborate its general performance, investigate internal and external reason for the imbalance of liquidity; In the third chapter, we make an analysis of the impact of the imbalance liquidity; In the fourth chapter, on the basis of the analysis in the front , we make an empirical analysis of the relations between the macro indicators of liquidity and the macro economic indicators according to the sample since 1997 to 2008, the macro economic indicators include the difference between import and export , foreign exchange reserves , savings deposit, the later concern consumer price index, stock index and interest rates .We set up bivariate VAR model between them, with impulse response function and variance decomposition analysis, we explore the interrelationship between liquidity and macro-economic variables, through the empirical analysis, we need to know which factors are source of the imbalance of the liquidity and the size of the impact of the liquidity imbalance on the price variables. Our empirical results show that high savings are the root causes of imbalance of the liquidity, meanwhile, there is complex relationship between liquidity and asset prices, the interest rate be able to show that the liquidity situation of our country on a certain extent; In the fifth chapter, in accordance with our analysis of the preceding chapters and empirical results, we give some recommendations to improve the effect of liquidity management.In this paper, the innovation lies in the fact that we try to use empirical analysis to analyze the relationship between the liquidity and macroeconomic variables in the VAR model, in order to avoid the selection of the order of the variables has effect on the analysis of impulse response, we use the two-variable VAR model, meanwhile, our empirical research results have some different from recent research , foreign exchange reserves are the direct cause of imbalance of the liquidity rather than root causes, high savings are the root causes.