Money and Monetization in China's Economic Reform
Posted: 14 Apr 1998
Monetization has been argued as the fifth feature in China's economic reform in addition to privatization, marketization, liberalization and pragmatization. If monetization is taken to mean a process through which variations in money supply or interest rate are to affect macroeconomic variables, evidences do not supply the existence of such a process in China. By constructing four causality relationships between interest rate and savings, money and inflation, interest rate and investment, and money and national income, the empirical results show that at best there was a greater use of money and a restoration in the functions of money since the late 1970s in China.
JEL Classification: E6
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