International Journal of Business and Social Science

ISSN 2219-1933 (Print), 2219-6021 (Online) DOI: 10.30845/ijbss

The Demand for Money in China: Evidence from Half a Century
Dr. Liaoliao Li

This paper employs real money balances, real GDP, inflation rate, and price level to study money demand in China in three periods of time: pro-reform (1952-1978), post-reform (1979-2003), and the whole period (1952-2003). We test stationarity of the time series and examine the consistency of the long-run money demand in the emerging economy of China. There is a stable long-run money demand function for China during pro-reform period and post-reform period respectively. However, because of the inconsistent monetary policy and ongoing economic reform, a long-run equilibrium money demand function does not exist in China throughout the half-century sample period from 1952 to 2003.

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