| The fluctuation of agricultural products prices have an important impact on the the national economy, so the regulation of agricultural prices is an important problem related to the development of national economy.This paper study the influence of money supply upon China's agricultural prices, basing on Quantity Theory of Money and Agricultural Prices "Overshoot" Theory.First of all, we introduced the Quantity Theory of Money and Agricultural Prices "Overshoot" Theory. Quantity Theory of Money emphasizes the influence of money supply upon general price level, but Frankel put forward Agricultural Prices "Overshoot" Theory, which divide the product market into industrial product market and agricultural product market, the former's prices are fixed, while the later's price can adjust.It is proved that when it come to monetary supply impact, the agricultural products price is adjust more quickly and profoundly than the manufactural product price, namely "overshoot" phenomenon. Then, we study the long-term trends and short-term fluctuation characteristics of money supply, agricultural prices and manufactural product price from 1985 to 2010.By compared the China's monetary supply, agricultural production price index and manufactural product price index,we found that agricultural prices and manufactural product prices are rising as the money supply growth in the long term trend.Judging from short-term volatility, agricultural prices fluctuated extent larger, and commodity prices relatively small, explain the fluctuation in prices of agricultural products fluctuations may exist "overshoot" phenomenon. Finally, basing upon the above Agricultural Prices "Overshoot" Theory and the description of long-term trends and short-term fluctuation characteristics of monetary supply, agricultural product prices and industrial product prices, we constructs the econometrics model to exam whether our country exists agricultural prices "overshoot" phenomenon.Co-integration theory and error correction model test results show that the money supply and agricultural commodity prices co-integration relationship between, the money supply and commodity prices also exists cointegration relationship between the degree to which and the ways, but there are some differences on in other conditions remain unchanged, the premise, the money supply the long-term trend of agricultural prices greater influence. Using vector auto-regressive model and impulse response function testing results show that under the money supply, i.e., agricultural prices impact industrial reaction faster, greater declines, but more short duration.The research concludes that, in the long run, there is a long-term equilibrium relationship between China's agricultural prices and monetary supply; In the short run, when there is monetary supply shock, agricultural prodprices there are "overshoot" phenomenon. This means that agricultural product prices upward trend in long-term is consistent with the money supply growth, but its short-term significant motion cannot be completely due to the money supply, which related with the characteristics of agricultural product market itself.The innovation of this paper is study the China's monetary supply impact on agricultural prices for first time, basing on the analysis of the China monetary supply and agricultural prices characteristic since reform and opening,empirically analysed the China's money supply for agricultural prices the long-term equilibrium and short-term dynamic adjustment relations and agricultural prices "overshoot" phenomenon through Cointegration test and error correction model and Vector auto-regressive. |
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