Abstract
With a rapid market opening and structural reforms, Chinese economy has made great progress since 1978. A shortage of the necessities in product markets has been changed into overproduction and insufficient demand. An issuing of national debts in capital markets and then an opening of stock and foreign exchange tradings initiate the operations of stock, mutual fund, and futures markets. Thus applicability of IS-LM model in the analysis of Chinese economy is more plausible at the present time for the rapid development of Chinese capital market and the rising financial innovation activity than in the past.
The objective of this thesis is to investigate the effectiveness of monetary policy by Chinese central bank with its economic reforms for 25 years. The important results of this study are as follows. First, unit roots of money supply, real gross domestic product and interest rates are present using the ADF test and the PP test. From Johansen-Juselius MLE test, we find a long-run equilibrium co-integration relationship among these three variables examined.
Second, for 1978~2001, 1991~1992 and 1996~2000 periods, what actually causes different slopes of the LM curve is the income factor, and for the other periods, that is the interest rate factor, which means that the income factor first moves vertically and the interest rate factor moves then horizontally as increases in money supply shifts the LM curve outward. Finally, in the estimation of money demand elasticities with respect to income and interest rate, the long-run estimates of income elasticity are far greater than one, which implies money is an extreme luxury good in China. The interest rate elasticity estimates, however, exhibit a huge volatility and with positive sign unexpected, which can possibly be explained by deflation and tremendous savings in China since 1993.
| Identifer | oai:union.ndltd.org:NSYSU/oai:NSYSU:etd-0728104-175305 |
| Date | 28 July 2004 |
| Creators | Liu, Chunglung |
| Contributors | Dun-Mo Hong, Chung Chu-hsong, Chin Shan-non, Jeng-Bau Lin |
| Publisher | NSYSU |
| Source Sets | NSYSU Electronic Thesis and Dissertation Archive |
| Language | Cholon |
| Detected Language | English |
| Type | text |
| Format | application/pdf |
| Source | http://etd.lib.nsysu.edu.tw/ETD-db/ETD-search/view_etd?URN=etd-0728104-175305 |
| Rights | campus_withheld, Copyright information available at source archive |
Page generated in 0.0027 seconds