Demand for money in transition: evidence from China's disinflation

Arbeitspapier

We examine money demand in the Chinese economy during a period characterized by significant disinflation and outright deflation, coupled with strong output growth.Our study establishes a stable money demand system for broad money M2.Inflation affects the adjustment of the system towards equilibrium, and shocks to broad money are found to lead to higher inflation in the context of an impulse response analysis.The results provide support for the PBoC's policy of specifying intermediate targets for money growth. Importantly, our results suggest that movements in the nominal effective exchange rate should be taken into account in a successful implementation of such a policy.

Object Details

• ISBN: 952-462-828-7
• Language: Englisch

References and Relationships

• Bibliographic citation: Series: BOFIT Discussion Papers ; No. 10/2006

Classification and Topics

• Classification: Wirtschaft ; Price Level; Inflation; Deflation ; Demand for Money
• Subject: Money demand ; Deflation ; China

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Mehrotra, Aaron
• Event: Veröffentlichung
• (who): Bank of Finland, Institute for Economies in Transition (BOFIT)
• (where): Helsinki
• (when): 2006

Further information

• Handle: http://hdl.handle.net/10419/212582
• Last update: 10.03.2025, 11:45 AM CET