Research On Moderate Ratio Of Chinese Money Stock And GDP

Along with steadily rising C hinese M2 / GDP value, people are paying more and more attention to it. Related research has discussed this topic from different angles to explain this issue. But for a complex economic system, almost every aspect will involve money or GDP, which makes obtaining a straightforward explanation is relatively difficult, and so as the determination of a moderate range.This paper examines the data in China and the world, which we can see, the general trend of this proportion is upward since 1980, and on average, the proportion of middle- income countries increased the most, followed by high- income countries, while the low- income countries has the slowest rise. From the long-term trend, it cannot determine whether there is a moderate range, but from short-term fluctuations, despite sharp fluctuations occurred in many cases, but there may still be associated with a moderate range with other economic variables.In order to study these issues, the paper analyzes M2/GDP theoretically and discusses the long-term trends and short-term fluctuations of M2/GDP separately.When discussing the factors which will influence the long term trends, this paper point out that the money is not only used in the transaction of final products, but also used in the trade of intermediate goods. The changes in industry chain may bring changes in M2/GDP. In order to support this point, this paper presents a corresponding theoretical model and references relevant research on the industrial chain. The model also suggests that broad money, ie M2, as measure of the scope of money stock is appropriate in this paper. Derived from the theoretical model, there are some specific reason could affect M2/GDP : first, the extension of the industrial chain will make the M2 / GDP increase; second, the change of value added by different part of the industry chain will affect M2/GDP; third, if the economic turnaround is slower, the M2/GDP will increase. The first point implies the productio n of decentralization will make M2 / GDP increase, while the second point implies that the international division of labor will make M2 / GDP different from country to country.After the theoretical analysis above, we use a formula derived from Fisher transaction equation. By defining transaction coefficient, the study of M2 / GDP is converted to the study of transaction coefficient. Assuming the increasing speed of transaction coefficient decrease in the time, a logistic equation is derived to fit the historical data. By using quantum genetic algorithm to fit the historical data, parameters of the equation is obtained. This result serves as long term trends in the later discussion.The discussion of short term fluctuation is based on the long term trend discussed above. The short-term fluctuation is defined as the deviation of actual value and the long term trend. This article uses a DSGE model with monetary factor in residential utility function. The decomposition of the M2 / GDP historical volatility shows that a variety of exogenous shocks have impacts on M2 / GDP, and the directions are different. This is also a reflection of the change of M2/GDP is complex, and a simple answer is hard to find.Finally, under normal economic circumstances, we estimate the corresponding range of short-term fluctuation of M2/GDP. The normal economic circumstance is defined by moderate range of output, consumption, investment, labor force, inflation, wages and interest rates. Starting from the steady state, this paper simulates the economic impact and calculates the corresponding position of M2/GDP and gives the range of its movements. The results show that the 5% and 95% quantile of short-term fluctuation range of M2/GDP is-6.21% and 6.35%, and historical data are mostly fall in this range. In addition, starting from the current situation, this article gives a forecast of M2 / GDP for next few years.