The Measure Of Money In Circulation By The Density-Based Stochastic Monte Carlo Filter

The amount of money in circulation is a very important economic indicator,however, there are actually few studies about it. On the one hand, China’s marketeconomy started fairly late and at present, is undergoing development andtransformation, with no experiences concerning monetary policies and macro-control,nor applicable international practices; On the other hand, money in circulation hasalways been considered as the statistical indicator by the People’s Bank of China, M0.Therefore, most scholars see the money in circulation as an observable economicvariable in economic analysis and pay no attention to it. On the contrary, many scholarsare very interested in the velocity of circulation, however, most papers only measure thecorresponding velocity of M0, M1, M2, analyze the changes of the circulating velocityin the long or short term and make relevant proposals, presenting few innovativemethods of calculating the velocity of circulation. In this paper, we will lay aside thedivision, construct the economic model and apply Density-Based Stochastic MonteCarlo Filter to estimate the money in circulation and the velocity of circulation. Wecollect economic data of nearly a decade, compile and run program and employ geneticalgorithm to optimize. At last, we draw the image of money in circulation and velocityof circulation, make a comparison and find that the calculated money in circulation canaccount for the change of CPI quite well after optimization.