Modeling Of China During The Transition Period The Demand For Money

Because of twice shockes of oil crisis in the early and middle of 1970's and the collapse of Bretton woods system, the traditional econometric modelling approach was suspected.In the retrospection of traditional modelling approach,several new econometric modelling schools, including Hendry's general-to-specific modelling approach, Leamer's extreme bounds analysis, Sim's vector autoregression (VAR) and co-integration theory which aims at exploring the long-run stable relations between variables. Hendry's general-to-specific modelling approach both takes the advantages of economic theory and data feature,utilizes the information jointly,views modelling as a systematical proceeding of understanding,such aviods the shortcomings of "thoery driving" of traditional method and "data driving" of VAR,and absorbs the accomplishment of co-integration theory.Because of these advantages ,in this paper,the general-to-specific modelling approach works as the main instrument of analysis.Money demand theory is the core of the entire money theory and improtant component of macroeconomecis. While, theoretically, there is much contraversy, ideas towards the theory of money demand still symbolize the difference of economic schools. Aside of this, money demand theory is closely related with practice. As China is still on the transition way to market economy, the changes of macroeconomic policy and microeconomic agents' behaviour have deeply influented money demand. Finding out the main factors and the long-run stable relations between money demand and other economic variables is an interesting subject.In this paper, I apply the general-to-specific modelling approach into money demand analysis,try to combine the reform practice and dynamic modelling approach and find out the factors which influent money demand.The first chapter briefly retrospects the essence,definition,and measurement of money and several chief theories of money demand. The essence,definition,and measurement of money are the basis of the entire money thoery,and the hardest part at the same time.I try my best to give a clear and logically consistent framework. Later, money demand theories are introduced in detail, especially the theories of Keynes, Freedman, Gray and Shaw.The second chapter introduces the origin of general-to-specific modelling approach and reduction theory, exhibits how to reduce the complicated data generating process to a simple auroregression distribution lag model(ADLM).The third chapter is the centre of this paper .Long-term money demand is investigated from the piont of economy monetarilization since the year 1978.Taking into account the development of capital market, short-term money demand is investigated as well. Error correction models are established and some good empirical results are got.