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Money demand elasticity, effective money supply and money market disequilibrium: ¡°China¡¯s Puzzle¡± and long-term excessive liquidity

Author

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  • LI Zhiguo

    (School of Management, Fudan University, Shanghai 200433, China)

Abstract

Chinese excessive liquidity problems are more serious than other main countries. The upgrading industrial structure and the increasing opening degree lead to the excessive money demand and higher money demand elasticity. Bad credits weaken money supply effectiveness and lead to illusive increasing money. We set up the money market disequilibrium model under the condition of the excessive liquidity. The imbalance between money demand and money supply is the key of Chinese excessive liquidity problems.

Suggested Citation

  • LI Zhiguo, 2008. "Money demand elasticity, effective money supply and money market disequilibrium: ¡°China¡¯s Puzzle¡± and long-term excessive liquidity," Frontiers of Economics in China-Selected Publications from Chinese Universities, Higher Education Press, vol. 3(2), pages 209-222, June.
    • Handle: RePEc:fec:journl:v:3:y:2008:i:2:p:209-222
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    File URL: http://journal.hep.com.cn/fec/EN/10.1007/s11459-008-0009-5
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    More about this item

    Keywords

    excessive liquidity; money demand elasticity; efficient money supply; disequilibrium model;
    All these keywords.

    JEL classification:

    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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