An Empirical Study On The Excess Money In China

Since reforming and opening,the economy and finance of China has undergone major changes, economic system gradually change from planned economy tomarketeconomy,however in the process of reform,there are some difficult to explain the phenomenon,mainly for abnormal relationship betweenthe money, prices, outputs of the three, namely the money supply rapid growth excess the price and output growth.American economist Mackinnon called this phenomenon " Chinese mystery".Since the excess monetary issues has been raised, it caused the attention of many scholars at home and abroad. For the measurement of the degree of excess money, most scholars still use the formula based on the measurement method of currency transactions.However, with the development of economic of China, especially after the establishment of capital market and the size of virtual economy has been increased, Fictitious economy and hypostatic economy two kinds of forms and interaction constitute a new pattern of modern economy system, China’s economic structure has undergone significant changes,the assumption of constant velocity of money in the currency trading equation doesn’t held in China.The article proposes to re-estimate the degree of excess money after1991with the method of the monetary overhang which is more mature abroad and It was foundthat since the last century it is indeed exist excess money, but compared with the calculation resultsbefore there is relatively substantially drop. At the same time,it gives the empirical testing of the reason of excess money from different aspects,and the results show that currency, virtual economyhas the reverse effect on China’s excess money, and the marginal propensityhas positive influence to consume excess money.The main structure is divided into five parts:the first part is the introduction, point out the research purpose and significance, after the literature review and summary,.The second part gives the excess money background as well as the excess money concept.The third part estimites China’s excess monetary degree, which compared the results adopt the traditional transaction equation the calculation with the method to calculate the monetary stagnation. The fourth part gives empirical testing ofthe reason of China’s excess money, which explain the causes of excess money from the virtual economy monetization hypothesis, hypothesis, hypothesis of diminishing marginal propensity toconsume. The fifth part of the main conclusions of the article summarized, and based on this puts forward some policy suggestions.