Discussion On The Cause Of M2/GDP Ratio In China From The Perspective Of Money Supply And Demand

Economists typically use the ratio of the broad money supply M2 to the gross domestic product(GDP)ratio,M2 / GDP,to measure the extent to which a country or region is financially deepened or the degree of currency oversize.Since the reform and opening up,the ratio of China's broad money supply M2 to gross domestic product(GDP)has risen from 31.51% in 1978 to 202.06% in 2015.And this ratio topped the list regardless of compared with the developed countries,developing countries or emerging economies.This peculiar phenomenon has always been the concern of scholars at home and abroad,they raised the value of this ratio from a different point of view and put forward many valuable ideas,but has not yet reached a consistent conclusion.Therefore,it is of great theoretical and practical significance to analyze the causes of higher M2 / GDP and propose corresponding policy suggestions to avoid the negative impact of excessive M2 / GDP.First of all,this paper summarizes the research results at home and abroad,and points out that there are a variety of representative points worthy of referencing.Then,this paper describes the main performance of M2 / GDP ratio change in China,and uses Eviews software to carry out simple linear regression analysis.It studies the long-term trend and cyclical trend of M2 / GDP and finds that China's M2 / GDP ratio not only has a long-term trend but also Show a trend of reverse cycle.At the same time,Comparing China's M2 / GDP ratio with the United States and other developed countries,Thailand and other developing countries and India and other emerging economies,founding that the ratio is not only higher than the developed countries,but also higher than other developing countries and emerging Economies.It should be recognized that the high proportion of M2 / GDP in China is caused by many factors in China's economic and financial,but if it is necessary to clarify this issue in the end,the author thinks that it should also proceed from China's relatively much money of gross domestic product,So this paper mainly thinks this problem from the monetary level of China's M2 / GDP ratio,taking into account the demand level and supply level of money.In the analysis of the money supply structure,the increase of M2 / GDP in China is mainly due to the excessive growth of quasi-currency.On the analysis of the quantity of money supply,the rapid growth of M2 is leading to the increase of M2 / GDP ratio.In terms of the demand of money demand,the transactional demand of money,the Preventive money demand and the speculative demand of money together led to the M2 / GDP ratio rising results.In order to analyze the reason of the M2 / GDP ratio rising,this paper establishes the corresponding econometric model with the relevant economic data,selects the currency circulation rate V,the economic growth rate JZL,the savings rate CXL and the domestic credit ratio XDL,and introduces the foreign exchange system Based on the data from 1978 to 2015,use the Granger causality test,unit root test and cointegration test which were carried out by econometric software,and the error correction model was established to verify the results.The empirical results show that V,JZL,CXL,XDL and G are Granger reasons for the explanatory variable M2 / GDP,and there is a long-term equilibrium relationship between M2 / GDP,V,JZL,CXL,XDL and G.Finally,based on the theoretical influencing factors and empirical analysis results of M2 / GDP,this paper puts forward relevant policy suggestions from the aspects of reducing the residents' saving rate,encouraging financial innovation,developing the government bond market and rationally disposing the bad assets.