Research On The Statistical Law Of Money Multiplier And Velocity Of Money Of China Since 1984

A crucial year for the whole China since the implementation of the reform and opening-up policy is 1984 since when People's Bank of China officially acted as a true central bank.Money multiplier directly links to monetary expansion which further exerts huge influences on social economy and nation welfare.Besides,the velocity of money,which also affects national economy through the turnover of money,is of huge significance.Descriptive statistical method is used to analyze the changing tendency and influential factors of money multiplier and velocity of money in China.Moreover,econometric analysis based on vector autoregression model(VAR model),including granger causality test,co-integration test and pulse response analysis,is also used to study the quantitative relation of various economic indicators in China.Based on the descriptive statistical results,money multiplier in China,which fluctuates frequently and greatly,does not show any linear trend.However,the velocity of money in China shows a downtrend in the long run.On the other hand,econometric analysis results tell us that price level is more sensitive to the fluctuation of velocity of money compared with money supply and money multiplier,which reveals that money flow has a more powerful influence on national economy than money stock.Furthermore,the econometric analysis results,based on the study on the quantitative relation of house price,stock price,money supply and velocity of money,show that monetary transmission mechanism in the field of real estate and stock market is still effective.Rise in house price and stock price will cause decline in the velocity of money and rise in money supply.