The Disequilibrium Analysis Of Supply And Demand For Money In China

With the globalization of economic, development of information technology, financial deepening and innovation, Every country’s economies have entered a period of rapid development, especially in China, but we should know that the development is out of balance, regional economic development is uneven, the industrial structure is unreasonable, the distribution of income is not fair, savings and consumption is not balanced and the non-equilibrium of supply and demand for money etc.According to non-equilibrium theory we know that non-balanced economic system is normal situation, either oversupply or over-demand. And he statistical indicators of money supply in China show us that there exsits excess supply of money in recent years, In order to further confirm the conclusions of qualitative analysis and better interpret the causes of non-equilibrium and propose countermeasures, this paper make an empirical test on non-equilibrium of the money supply and demand.This paper focuses on the stability of money demand function and controllability of money supply function. On the basis of the classic money demand function,I considered the impact of financial innovation and chose stock market as representative of the financial innovation. Compared the two estimates results, I found that income elasticity of demand and interest rate flexibility are not very different, indicates that China’s financial innovation’s effect on money demand function is small, so the money demand function in China is stable. In our analysis of the controllability of money supply, I studied the endogenous of China’s monetary base and money multiplier, and made an empirical test, respectively, according to the test results,we know that the monetary base has, is a function of foreign trade surplus, with a positive money supply relative; income elasticity of money multiplier is 1.6, indicating that China has a pro-cyclical monetary multiplier. So this paper offer response measures for controlling the over money supply: First, promote the interest rate market, actively;Second, improve the exchange rate formation mechanism...