| During recent years, China’s generalized money supply-M2has been rising at a higher speed than that of GDP. The balance of M2has reached to99860billion Chinese dollars until Feb.28,2013, and the number has surpassed100000billion until now. At the same time, what we see is the continuing sharp rise of prices of China’s real estates, the steady rise of CPI and the high volatility of China’s stock market.Compared with international level, we find the ratio of M2/GDP in China is the highest in the world, so we suspect there is "Monetary Phenomenon" in China’s CPI and prices of real estates and we believe the Chinese government has issued much more currency than normal level.Considering the high prices of China’s real estates and the sustained downturn domestic consumption which is one of the three carriages pulling China’s economic development, we also suspect that the high prices of real estates have restrained the domestic consumption. That is to say, there is strong rigid demand for real estates in China, and the ratio of real estates expenditure in total disposal personal income, so people have to make a choice between basic consumption and housing consumption.We also observe that there is little connection between the fluctuation of stock market and the fluctuation of M2, so it is very necessary for us to explore the fluctuation characteristics of stock market under the background that there is a continuing high rise in M2.Therefore this paper selects monthly data of M2, CPI, SZZJ and FJZS from Jul.,2005to Feb.,2013, and we conduct VECM estimation, impulse response and variance decomposition on the base of VECM model. We find that there is a stable long-term equilibrium between the four variables, M2has always deviated from the long-term equilibrium and that there exists "Monetary Phenomenon" in CPI and prices of real estates, stock market not included. And finally according the phenomenon and reasons we find in these data, we put forward some relevant suggestions. |
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