An Analysis Of Restraint Effect On Overheating Economy By Raising Legal Deposit Reserve Rate

Altrough the growth of the monetary loan of the bank has supported the fast development of national economy, it brought many serious problems, such as, fast growing investment, excessive newly oprated project, oversize building scale and unreasonable investment structure. If there isn't the requisite measure to adjust and control, it will encourage the low-level redundant construction and aggravate the structural contradiction that supply exceeds demand. And then, it will increase the potential systemic financial risks and social risk, finaly, influence the sustainable development of economy. There are inherent consistency between money supply and social demand. The increasing of money supply will be changed to the increasing of social demand and the social demand needs to be realized by the money supply. It has always been the focus of the field of currency finance how to solve the money supply problem during the ecnomic growth process. The reasons and consequents of raising the rate of legal reserve have already become generally concerned points.On the basis of drawing lessons from the domestic and international scholars'relevant research on the monetary policies, this paper has adopted qualitative analysis and quantitative analysis to did an emperical research on the macro effect of the legal reserve policy. The groundwork that this paper did is as follows:First, it analyzed the the current situation, causes and potential dangers of the overheating economy of our country. Second, it used the aggregate supply, aggregate demand model and conduction mechanism model of legal reserve increasing to prove the influnces of legal reserve policy that central bank applied. Then we investigated the economic effect of this adjusting policy and pointed out the limitation of this kind of policy. These work have offered the essential foundation for the following quantitative analysis. Third, on the foundation of analyzing the theory that is concerned to the relationships of legal reserve and economic growth, it chose random variables and sample to construct a mathematical model. This model did a regression analysis of the main legal reserve policy variable M0, M1, M2 with the main economic variable and carry on a relevance analysis of money supply and GDP. Then it has analyzed the relavance of the newly-increased money supply and the newly-gained loan rate. Finally, it analyzed the relevance of legal reserve and economic growth. On the basis of these work, this paper came to the conclusion and recommendated the policies to restrain the overheating of economy.