The Empirical Study Of The Excess Money Supply Problem In Our Country

In1993, at the time of studying our country’s economy, Mckinnon found that the growth rate of money supply in China is far more than economic growth, but the proportion of fiscal revenue to GDP is declining, domestic inflation was mild, he was mystified for the phenomenon of "large amounts of excess money supply and low price level coexistence". Therefore, he named "the fall in revenues while maintaining price stability and high financial growth" as "China’s currency mystery " Since Mckinnon (1993) put forward "China’s currency mystery ", the excess money supply problems gradually cause the attention of the scholars in our country, but compared with foreign countries, our country’s research is not mature enough. There are some disadvantages:first, the definition of the excess money supply is not clear; The second is that the vast majority of measurements of the excess money supply are based on traditional transaction equation method, this method has certain deficiencies; Third, in the process of the research scholars ignore the impact of institutional factors on the relevant variables; Fourth, the literature of the excess money supply and economic influence in China is relatively rare, most of the research.only study the direct relation between money supply and economic.In view of the above shortcomings, this paper mainly discussed the following:first, to define the excess money supply, the excess money supply refers to the part of real money supply excess the existing economic needs. if other conditions unchanged, the excess money will eventually cause the price level rises. Second, in the choice of methods to measure the excess money supply this paper adopt abroad more mature method of "monetary lag deposit". The method is based on the currency equilibrium theory, and considers the currency needed for the virtual economic development. At the same time considering the institutional factors’impact on money demand. Third, using phase analysis study the cause of the excess money supply in the empirical analysis. The empirical results show that the economic monetization, the development of virtual economy, the increase in foreign exchange, financial revenue and expenditure unbalanced caused the existence of the excess money supply in different degree. Fourth making an empirical analysis of the impact on China’s economic and financial from changes of the excess money supply Results showed that the excess money supply changes will promote economic growth to some extent in the short term, but in the long run, it is not conducive to economic growth. The change of excess money supply has a positive role in promoting price level, and more persistent. The change of excess money supply also have a more lasting positive effect on exchange rate, the excess monetary degree rising will lead to the depreciation of the RMB. Fifth, through empirical research about the formation of the excess money supply and the empirical analysis of the impact of economic and financial, then put forward the following policy recommendations:guide the capital market to develop reasonable, to guard against the risk of asset price bubble; Sound fiscal policy, balance the budget, reduce the fiscal deficit; reform the forced to written guarantee system to the apiration written guarantee system, split the relation between foreign exchange reserves and monetary base; To speed up the pace of implementation of the marketization of exchange rate, strengthen the independence of the central bank in monetary policy.