Research On The Factors Influencing The Circulation Speed ​​of Money Based On Co - Integration Method

Money velocity is a key concept in monetary economics,and also an important and complicated problem.Money velocity is stable or not,directly related to the feasibility of money supply as the intermediate target of monetary policy and the effect of monetary policy.Fisher equation shows that the money supply is determined by the money velocity,so monetary policy needs to consider the effects of money velocity changes.And,the change of money velocity itself,on the one hand,is the result of the macroeconomic and financial environment changes,on the other hand also reflects many problems of the economy and financial sector.Therefore,master the regular pattern of changes in money velocity,maintain or improve the effect of the monetary operation is to ensure steady economic operation and the important condition of monetary policy’s effectiveness.This paper uses qualitative analysis method an empirical economic analysis method to analyze money velocity in our country.First,this paper introduces some classical theories about money velocity,various theory angle of view,theoretical conclusion, the contribution and effects of each school.Then the domestic and foreign research literature on the money velocity were reviewed and conducted in accordance with the different research perspective.And on the basis of the enlightenment,laid a theoretical foundation for the later chapters.Secondly,this paper defines the money velocity and selected the income-producing money velocity for the following theoretical and empirical analysis.On the basis,we conducted a time series analysis on the change of money velocity in China since reform and opening-up,found the money velocity in the long-term downward trend,and show the change of economic cycle characteristics.Finally,this paper mainly analysis the influencing factors of money velocity from the aspects of theoretical and empirical.In the theoretical analysis,the reasons of influence the money velocity can be divided into economic factors,institutional factors and technical factors.Economic factors include interest rates,inflation,savings,monetization of the economy and the income distribution gap.Institution factors includes foreign exchange market,capital market and financial efficiency.And technological factors refers to the electronic currency and other innovative financial tools.We analyze their impact on money demand,and then illustrate the impact on the money velocity.In the part of empirical analysis,this paper selects the time series data of interest rate,the consumer price index,foreign exchange,monetization degree of economy,and the level of financial from 1978 to 2012,and using the cointegration theory to conduct econometric model.And draw the conclusion of that,V1,V2 and interest rates are negatively related,so as to foreign exchanges and monetization degree.but was positive to the level of financial.Then we analyze how the variables influence the money velocity.Finally,on the basis of the above,some countermeasures are put forward to improve the current situation of money velocity in our country.