An Empirical Analysis of Factors Influencing China's Broad Money Demand

According to modern quantity theory of money,taking money data in 1996-2009 as a sample to build long-term demand function on broad money through empirical analysis,the research shows that the permanent income elasticity of broad money demand is greater than one;the interest elasticity is less than the income elasticity;the expected inflation rate influences broad money demand significantly,showing negative change in relationship,namely,when expected inflation rate rises,the demands on broad money declines.Meanwhile,the conclusion shows that we can test the efficiency of monetary policy according to the elastic relationship between money demand to reach the aim of controlling money supply,improving money demand system,and balancing price index.