The Influencing Mechanism Research Of China's Monetary Supply For Price

The traditional quantity theory of money considered that there was a direct proportion between money supply and price,that is to say the increase of money supply will bring prices synchronous rise. Since the founding of our country it had been as a monetary policy guidelines, but with the deepening of the reform of economic system and the development of economy, more and more of the facts and the research shows that the money supply growth rates and price changes without a clear relation mode. Money supply on price effects directly affect the monetary policy implementation effect and people's daily life. Therefore, the study of money supply on prices influence has the extremely vital significance. Prices are mainly affected by changes in supply and demand. As one of the factors affect the total supply and demand, money supply affects price level need several intermediate link. This article mainly from the money supply affect prices of the specific way analysis their relation.Base on some development period in China's economy, short-term money supply exist negative effect on prices. Then, the new currency specific flow is analyzed, and the different flow of money supply to the price. Finally, from the solid economic and virtual economy respectively from two aspects of total social analysis of money supply and demand specific influence, and compare the total supply and demand of different variation degree of influence on prices. Theoretical studies show that the money supply into the entity economy influence the output of the main points on the spot and the lag, with long-term investment or fixed assets investment will have important lag affection on economic products supply. And the money supply into virtual economy will cause stock prices to rise and have different influences on the national output. On the one hand, it is helpful to the external financing for enterprises and promotes enterprise output increases. On the other hand it weakens the effects on supply for the shunting effects on currency, so that the degree of the influence on output is uncertainty. Money supply influence on the social demand mainly by the enterprise investment and consumption demand. Money supply into the entity economy expanded national economic output scale, cause people consumption demand and enterprise investment demand increase, thus increasing aggregate demand. The increase of stock price of a virtual assets price will cause two aspect of influence. On the one hand it has wealth effect on the increase in consumer spending, and on the other hand it brings asset prices rose by Tobin q affection and increasing investment of enterprises and a distributary effect to curb investment demand. Supply and demand of currency changes are caused by the different reaction elastic short-term money supply for the price action condemn directly responsible. When money supply change on the total demand more effects of aggregate supply and price changes and currency supply negatively correlated.In empirical studies, we choose the relevant datas since 1995 and constructs the price index and so on six variables VAR model. According to the model with price index for be explained variables regression equations, and then use pulse corresponding function analysis related economic variables change on the specific influence price level. Pass to our country money supply for the price the influencing mechanism study, we found that the reason for cause short-term money supply uncertain of price effect is the money supply different effects of the total supply and demand caused disequilibrium movement. Among them, stock market as a representative of virtual economy in the money supply shunting effects is one of the most important factors, just because a considerable portion of money by virtual economy absorption can cause used to keep the entity economy growth of monetary and liquidity relatively tight, thus influence social aggregate supply and demand variation degree. Finally, this article puts forward the corresponding countermeasures for control policies and financial system reform.