Research On Estimation Of Domestic Hot Money And Effect It Takes To Economic Of Our Country

With the rapid development of our economy and the rising price of domestic stock and real estate, a lot of international hot money entre our country. At the same time, there is also much flowing money for arbitrage creating which we call domestic hot money. With the increasing scale, domestic hot money is becoming a very important factor to our economic which we should not ignore. This paper firstly estimates the amount of domestic hot money with the new fixed ratio method. Then the paper studies the factors that affect the components of domestic hot money with co-integration theory and error correction method. Finally the paper analyzes the effect that hot money takes to the economics of our country with Solow's growth equation and impulse response function. The result shows that there is a large number of domestic hot money and its total amount is fluctuating with an increasing trend, also its total amount has exceeded the amount of international hot money for several times during the past years. The result also shows that though this large amount of hot money which keeps flowing constantly benefits our economics to a certain extent, yet at the mean while it also brings much adverse effects. The flowing domestic hot money may increase speculation of capital market and haphazard investment of investors and also may disturb the normal market order. So we should pay more attention to the problems of domestic hot money.Because of the defect of our supervision system, the finance system and legal regulation, we have a lot of problems in handling with the domestic hot money. According to the existing problems, our country should take effective measures as soon as possible to better the supervision and guidance of domestic hot money and finally promote the development of our economics.