A Study Of The Circulation Speed Of Currency In Chinese Transitional Period

This paper reviews the research results about the circulation speed of currency in China and defines the concerned terms and conceptions at first, then explores the characteristic of the circulation speed of currency in China since 1978. In the fourth part, the writer analyses the factors which contribute to the slow-down of circulation speed of currency by establishing money circulation speed function in Chinese transitional period and testing it empirically. The result of regression analysis indicates that income, monetization , resident saving ratio can explain the long decline of circulation speed of currency in Chinese transitional period. On this basis, this paper sets up a dynamic model to prove that the decline of money circulation speed is a kind of inevitable phenomenon in the process of transforming to the market economic system. Certainly, China money circulation speed does not fluctuate widely because China chooses a kind of" progressive" reforming model. The author points out that the recent gradual slow-down of money currency speed is due to the breaking down of the cycling chain of capital and the deposit can't turn into investment and form output effectively at the same time.