The relationship among money supply, banking lending and aggregate demand in China: 1994-2006
LI Qiong , WANG Zhiwei
Front. Econ. China ›› 2008, Vol. 3 ›› Issue (4) : 497 -512.
The relationship among money supply, banking lending and aggregate demand in China: 1994-2006
Based on the framework of Bernanke & Blinader (1988) and Walsh (2003), this paper provides a concise analysis for relationship among money supply, banking lending and aggregate demand; and makes an empirical test on relationship among China’s money supply, banking lending and aggregate demand from 1994 to 2006 by adopting the single-equation regressive model and vector autoregressive model in terms of Keynesian structural model and monetarism simplified model. The result shows that money supply and banking lending have both played a driving role on real economy. Because of non-market interest rates, Keynesian structural model cannot explain the transmission mechanism of China monetary policies better than monetarism simplified model.
money supply / banking lending / aggregate demand
Higher Education Press and Brill
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