Title: Macroeconomic interactions with money in China
Authors: Xiaohong Chen - Birkbeck, University of London (United Kingdom) [presenting]
Abstract: The aim is to estimate macroeconomic models of the Chinese economy to analyse the links between money and income, exports, inflation and interest rates. As China's economic reforms have undergone significant structural breaks after 1979 and 1992, 5-variable vector auto-regression, VAR estimated on two periods, 1980Q1-1992Q4 and 1993Q1-2018Q3, is used. The empirical evidence shows a long-run, cointegrating, money demand function in which the estimated long-run real income and real interest elasticity are respectively 1.51 (1.46) and -0.04 (0.01) over the period 1980Q1-1992Q4 (1993Q1-2018Q3). It also shows a long-run income equation in which the estimated long-run real exports and real interest elasticity are respectively 0.7 (0.68) and 0.01 (-0.03) over the period 1980Q1-1992Q4 (1993Q1-2018Q3). But the impact of real interest rate on long-run income is only significant from 1993.