Cointegration Test and Effect Analysis of Money Supply and Employment

摘要

Under the quantity theory of money, money supply will lead to inflationary pressures, while the short-term Phillips curve shows that the replacement exists between inflation rate and unemployment, thus money supply is related to employment. This paper analyzed empirically the relation between money supply and employment of the three industries ,using Cointegration test and the random variable parameter Hildreth- Houck model, the results show that there is no cointegration between China's money supply and employment, which is caused by factors other than the impact of money supply.