Modeling Demand for Money in China

摘要

An augmented money demand function for China is estimated to explore if financial innovations, government debt, capital mobility and currency substitution should be included in the context of money demand. The estimation results indicate that under the condition of open economy, modeling them in the context of money demand is currently unavoidable. The estimation results imply that M_1 rather than M_2 appears to have a close and stable relationship with economic activity, too.