The Measurement And Causes Of Excess Money Supply In China

Since1978, with the rapid growth of economy, China’s money supply M1, M2, average annual growth rate as high as20%, far more than economic growth, at the same time our country financial development indicators M2/GDP has showed a trend of rising, in2010, the proportion reached1.93, far more than the vast majority of countries in the world, during this period our country corresponds to the price level is still manageable. McKinnon (1993) study of the economy to money, relationship between output and prices, and the traditional monetary quantity theory contrary phenomenon, put forward the "lost money", and the excess money supply and low price level in our country the phenomenon is called "Chinese puzzle". Academic circles had a lot of research for this question, proposed the monetization, forced to savings, hysteresis deposit currency and a series of hypothesis. About whether the excess money supply in China? How to measure? Economists disagree about. In this paper, based on the study of China’s economic transition period of long-standing phenomenon of the excess money supply.Paper based on the classical money demand and money supply related theory, calculating the excess money supply measures in our country, and the cause of the excess money supply in China, puts forward relevant policy Suggestions. Papers on the history data of China’s money supply was reviewed, present situation analysis shows that China’s money supply M1and M2in1978-2012maintained an average of around20%during the period of growth, may leave hidden trouble for the excess money supply; Through the quantity equation theory, to our country monetary excess supply some simple calculation, get our country exists the phenomenon of excess money supply. Of money demand function based on VECM model regression, more precise measurement by the method of dynamic prediction of China’s monetary excess supply, confirmed that the money supply M1and M2in China there are different degrees of monetary phenomenon of excess supply. After demonstrates the existence of monetary excess supply in our country, the study of the cause of the excess money supply. From the banking system efficiency, institutional change and the stock market scale, the fiscal expenditure level, the level of investment in fixed assets and the central bank monetary base on six aspects to our country the influence of the excess money supply M2. LDR, urbanization rate and the basic statutory M0has significant effects of excess money supply M2part, and the stock market scale, the fiscal expenditure level and the influence of the level of investment in fixed assets was not significant. The results proved that the financial innovation, institutional change, regulation and control of the monetary authorities, and the efficiency of the banking system has important effects on monetary excess supply.To this end, China’s monetary authorities should continue to implement the stable monetary policy to eliminate monetary phenomenon of excess supply, efficiency of commercial bank itself should increase its loan, attaches great importance to the development of capital market make the virtual economy shunt excess currency, and requires the reasonable fiscal policy and monetary policy coordination, so as to make money in the economy gradually reduce the excess supply of parts, reduce the harm to the real economy, makes money between each economic subject the matching more reasonable.