Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/212582
Authors: 
Mehrotra, Aaron
Year of Publication: 
2006
Series/Report no.: 
BOFIT Discussion Papers 10/2006
Abstract: 
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.
Subjects: 
Money demand
Deflation
China
JEL: 
E31
E41
Persistent Identifier of the first edition: 
ISBN: 
952-462-828-7
Document Type: 
Working Paper

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