Empirical Analysis Between Excess Currency And Structural Rise Of Price

At the time of completion of this article in January 2020,according to the latest data from the People's Bank of China,China 's broad money supply(M2)has reached200 trillion yuan,which is just past the breakthrough of the 100 trillion mark in April2013.It took less than 7 years.In the context of the new stage of development,China 's GDP growth has gradually slowed down,so the issue of currency has once again attracted attention.Previous academic circles still have some controversy on whether there is currency over-issue in China.Then whether there is currency over-issue in China,and if so,what are the reasons that cause currency over-issue?These are issues worthy of our study.Further thinking,what are the consequences of currency oversupply? Currency oversupply belongs to the field of partial macroeconomic theory,which not only has a profound impact on the overall economic operation of the country,but also has a greater impact on people's real life.For example,currency oversupply has led to price increases,and the magnitude of price increases for different types of items has significantly differed,which also has different impacts on different areas such as people's life,work and investment.Therefore,our research on the phenomenon,causes and effects of currency oversupply has great significance not only at the academic level,but also at our daily life.This article starts with the core indicator M2 / GDP for measuring currency oversupply,and conducts a deeper vertical analysis and horizontal comparison based on previous academic research,and then draws a preliminary conclusion that China's M2 / GDP is indeed high.Based on Fisher's equation for the quantity of money,the existence of the currency super-discovery phenomenon was verified from two dimensions,the traditional indicator and the substitute indicator.Then,based on China's specific situation,the reasons for currency oversupply were analyzed in four aspects: economic transition,national debt level,foreign exchange reserves,and the decline in currency circulation.After verifying the existence of money oversupply and analyzing the reasons,the method of empirical analysis is used to study the impact of money oversupply on various prices.Replace the growth rate of money with the growth rate of broad money supply M2 from January 2015 to the end of December 2018.Select the six categories of life-related price indexes for food,non-food,education,clothing,medical care andsecond-hand housing in Shanghai during the same period.Stata software establishes a VAR model to study their mutual relationship.Through the results of the impulse response function and method analysis in the VAR model,it can be found that currency oversupply has the greatest impact on food and second-hand housing prices in Shanghai.Then,combining the traditional theory of currency inflation and mainstream viewpoints on price rises,the phenomenon of structural price increases was analyzed,and the representative items of food and houses,which were the most affected,were analyzed.Finally,this article also tries to put forward some suggestions.In order to improve the current phenomenon of currency oversupply,we must first reduce the supply of currency from the root.This is the source of all oversupply.Second,we must deepen the reform of the financial system and improve the efficiency of currency.M2 / GDP measures the amount of money required to create a unit of GDP.A higher current value indicates that the output value created by a unit of currency is relatively low.Finally,a new anchor for monetary policy must be formulated.The current CPI indicator does not reflect correctly.Considering the heaviest cost of buying an apartment,we shoud consider setting up a new price index that includes buying an apartment to track the real situation of money supply more accurately and timely.