05365oam 22010334 450 991078833320332120230721045719.01-4623-0532-61-4527-5107-297866128434571-4518-7278-X1-282-84345-1(CKB)3170000000055285(EBL)1608336(SSID)ssj0000940075(PQKBManifestationID)11528465(PQKBTitleCode)TC0000940075(PQKBWorkID)10949250(PQKB)11241840(OCoLC)608258066(MiAaPQ)EBC1608336(IMF)WPIEE2009131(EXLCZ)99317000000005528520020129d2009 uf 0engurcn|||||||||txtccrBroad Money Demand and Asset Substitution in China /Ge WuWashington, D.C. :International Monetary Fund,2009.1 online resource (32 p.)IMF Working PapersDescription based upon print version of record.1-4519-1707-4 Includes bibliographical references.Contents; I. Introduction; II. Recent Developments; Figures; 1. Actual and Targeted M2 Growth Rate, 1999-2007; 2. Renminbi Nominal Exchange Rate and REER, 1994-2008; 3. Currency Substitution and Expectation of Exchange Rate, 2003-07; 4. Number of Investor Accounts and Listed Securities on the Shanghai Stock Exchange, 1996-2008; III. A Model of Money Demand in China; A. Earlier Studies; 5. Household Holdings of Financial Assets, 2001-07; B. Model Specification; C. Integration and Cointegration Tests; Tables; 1. Unit Root Tests (ADF statistics); 2. Order of Vector Autoregressions3. Cointegration Analysis D. A Dynamic Model of Money Demand; E. The Model's Properties; IV. Conclusion; Appendices; I. Data Definitions; 6. Data Series, 1994Q1-2008Q1; II. Unrestricted Error Correction Representation for Real Broad Money; 7. Actual and Fitted Values of the Money Demand Model; III. Statistical Properties of the Dynamic Model of Money Demand; 8. Residual Analysis; 9. Recursive Least-Squares Parameter Constancy (recursive estimates); 10. Recursive Least-Squares Parameter Constancy (t-values); 11. Other Recursive Least-Squares Constancy StatisticsRecent changes to China's financial system, in particular ongoing interest rate liberalization, gradual movement toward a more flexible exchange rate regime, and rapid development of capital markets, have changed substantially the environment in which monetary policy operates. In light of these changes, we estimate an error correction model using a General-to-Specific methodology and confirm that a stable broad money demand function exists taking proper account of asset substitution, with an income elasticity of less than unity. Current inflation is found to have a significant negative impact on the real money demand. However, money demand does not appear very sensitive to interest rates, possibly reflecting their partial liberalization. Changes in the exchange rate also do not affect money demand significantly, but expectations of a further renminbi appreciation since 2005 appears to induce more money demand. Stock prices are statistically insignificant despite recent investors' interest in equity markets.IMF Working Papers; Working Paper ;No. 2009/131Demand for moneyChinaAssets (Accounting)Banks and BankingimfFinance: GeneralimfForeign ExchangeimfMoney and Monetary PolicyimfDemand for MoneyimfInterest Rates: Determination, Term Structure, and EffectsimfGeneral Financial Markets: General (includes Measurement and Data)imfMonetary economicsimfFinanceimfCurrencyimfForeign exchangeimfDemand for moneyimfDeposit ratesimfCapital marketsimfExchange ratesimfExchange rate arrangementsimfMoneyimfInterest ratesimfCapital marketimfChina, People's Republic ofimfDemand for moneyAssets (Accounting)Banks and BankingFinance: GeneralForeign ExchangeMoney and Monetary PolicyDemand for MoneyInterest Rates: Determination, Term Structure, and EffectsGeneral Financial Markets: General (includes Measurement and Data)Monetary economicsFinanceCurrencyForeign exchangeDemand for moneyDeposit ratesCapital marketsExchange ratesExchange rate arrangementsMoneyInterest ratesCapital marketWu Ge1472672DcWaIMFBOOK9910788333203321Broad Money Demand and Asset Substitution in China3685537UNINA