An Empirical Research On The Relationship Between The Development Of China's Stock Market And Money Demand

Since 1980,the instability of money circulating velocity has led to the instability of money demand in western developed countries,the central bank is facing a big challenge when making the money policies,and the economists founded that one of the most important reasons was lack of considering the factor of the stock.The stock market,which acts as the market mechanism of resource allocation,risk pricing,property right trading and conducting company,has deep effect and more influence on the modern economy and daily life.Most currency authorities in developed countries have indicated that there is link between monetary policy and the stock market. Also they regarded these effects stock market as the inside variable of establishing monetary policy.Market in China,since Shanghai Stock Exchange and Shenzhen Stock Exchange established in 1990s, China's stock market has developed rapidly,the willingness to invest in the stocks among the citizens and firms grows,which resulted in considerably high values of stocks and large trading volume. Therefore,the incremental demand in money can not be ignored. However, the central bank didn't take into the possible impacts of the stock market on the demand in money when making plan for the money supply.This text does the brief summary to the monetary policy and stock policy,Then use ADF test statistic,the counteraction test,the vector auto regression model,the vector error correction models,the impulse responses the function,variance decomposition method analyses the real example to the monetary policy of our country and interaction effect in the stock market,the real example is analyzed to include the impact on speed of money flow of the stock market,influence to monetary demand of stock price change. This dissertation intends to analyze the relationships between the stock market and the money demand thoroughly so as to provide useful information and supports for the monetary authorities.Including the stock market development impact on demand for money and structure.Providing a useful reference and supporting for the monetary authorities to make monetary policy.lt is a reasonable proposal for ease the stock market and transmission channels for money demand.