Economic Reform and the Demand for Money in China

28 Pages Posted: 15 Feb 2006

See all articles by David R Burton

David R Burton

affiliation not provided to SSRN

Jiming Ha

International Monetary Fund (IMF)

Date Written: April 1990

Abstract

Error correction models of the demand for a range of monetary aggregates in China are estimated with quarterly data for the period 1983-88. The estimated models fit the data reasonably well and appear to be relatively stable. Money demand is found to be sensitive to changes in expected inflation. In the case of currency, demand increases in the short term in response to an increase in expected inflation even though there is a fall in demand in the long run. A "cash-in-advance" explanation for this response pattern is suggested. It is also argued that the estimation results taken as a whole provide indirect evidence against the existence of substantial repressed inflation in China during the sample period.

JEL Classification: 223

Suggested Citation

Burton, David R and Ha, Jiming, Economic Reform and the Demand for Money in China (April 1990). IMF Working Paper No. 90/42, Available at SSRN: https://ssrn.com/abstract=884772

David R Burton (Contact Author)

affiliation not provided to SSRN

Jiming Ha

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

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