Empirical Research On The Relationship Between Excess Liquidity And Inflation

Loose monetary policy in recent years,leading to overheating and excess liquidity and inflation pressure increases.Indicators to measure excess liquidity General Marshall value(M2/GDP),so this article mainly uses M2/GDP indicator measuring excessliquidity.M2/GDP index high in China,which has been in a State of rapid rise and levels much more than other countries.M2/GDP only 0.236 in China in the early reform and opening in 1978.In 1996 exceeded 1,by 2012,M2/GDP close to 2,the highest in the world.By December 2015,the broad money supply M2 to 139.23 trillion yuan in China,and GDP ratio of 2.057.M2/GDP in our country under the background of higher,study leading to its deeper causes of high,to maintain steady economic growth while maintaining a moderate inflation has a specific meaning.Based on vector Autoregressive model and empirical analysis method of generalized additive models,explores the relationship between liquidity and inflation and further analysis of the influence factors of China's liquidity,and based on the conclusions it puts forward some policy suggestions,money supply,the Chinese Government to regulate,control,and inflation has a guiding role,and therefore has a strong significance.This whole chapter is divided into six chapters,with the existing literature,first describes the relationship between excessliquidity and inflation statistics,time series analysis inflation and structural characteristics,study the effect of excessliquidity on inflation,and then to theoretical and empirical research on the cause of excess liquidity,study the problem of liquidity is,in fact,looking for a better adjustment,inflation control,governance policies and proposals.The first chapter of this paper describes the background,the basic research and methods,and there may be a lack of innovation and Insufficient.The second chapter summary on the study of relationship between excessliquidity and inflation theory,sums up scholars at home and abroad study on the effect of excessliquidity on inflation,and representative view of the M2/GDP study,and then determine the direction and focus of this study.The third chapter is to explain the relationship between excessliquidity and inflation,mainly liquidity and selected measures of inflation,both theoretical research summary,analysis M2 number of trends and changes in the growth rate of trend inflation performance and features.The fourth chapter analyses the VAR model is constructed to the effect of excessliquidity on inflation dynamics,first on the variable M2/GDP and CPI Unit root test of its stability through the lag order of the identification and inspection of the stationary,so as to set the VAR model in the form of using pulse response analysis and variance decomposition model are explained.The fifth chapter is influencing factors research on China's monetary excessliquidity.First,from a theoretical analysis based on,and the Union's economic development to carry out analyses,and entropy-right method to construct a new set of indicators-national debt,using generalized additive models to study the effects of factors.The sixth chapter is a combination of the fifth chapter of the empirical results and third to fourth characteristic of chapters M2/GDP and inflation in China,proposed transforming the pattern of economic growth,expanding domestic demand,readjust the structure,establishing a sound social security system,using economic levers to stimulate consumption and support the financing system and the transformation of government functions and the financial institutions that regulate,control,inflation policy recommendations.Paper may exists of some innovation:due to economic event for economic data of generated has important of meaning,if some economic event led to economic data generated process in the occurred structural mutation,and we building model is ignored it,will mutation points before and after of data no difference treats,that by building of model on will produced larger of errors,so paper first on inflation for has structure mutation test.Not used prior points of the original sequence of the endogenous construction method to determine the structure of inflation.According to Xu Yunsong(2013)refers to make up for the fiscal deficit and excessive debt is causation,excessive fiscal deficits and debt as the Government's debt,the issuance of Treasury bonds by entropy and the fiscal deficit,these two indicators for integrated,on the basis of this,using generalized additive models nonlinear analysis M2/GDP of the root causes of our country.Paper exists of insufficient:due to paper selected of data for time sequence,time sequence non-smooth will led to pseudo return,while exists history of reasons,M2 in 1990-1995 monthly data of missing,paper selected has 1990-2014 years of annual data for research,data volume relative less,while also making a difference and prone to data loss,these are for built die brings has many difficult also brings has uncertainty.