Money supply, output gap and economic fluctuations: evidence from quarterly data in China
by Pan Xie; Yina Zhang; Chao Sun
International Journal of Internet and Enterprise Management (IJIEM), Vol. 9, No. 2, 2019

Abstract: Considering the endogenous structure of the aggregate supply curve, Okun's law, and the monetary output effect, this paper calculates the Chinese quarterly output gap between 1995Q4 and 2017Q2 using an SVAR model based on the inflation rate, real output, the unemployment rate and M2. Then, we reveal the influence of the time-varying characteristic on the real output using a TVP-SVAR-SV model. First, China's economy has experienced four rounds of fluctuations since 1995, and the fluctuations became stationary after 2011Q1, which is consistent with the main feature of 'great moderation'. Second, there was an asymmetric relationship between the volatility of output and money supply after 2000Q4, and the anti-Tobin effect became obvious after 2003. The shock of inflation aggravated the negative impact on output. Third, the output effect of easy monetary policy sharply decreased, and the response cycle shortened following the global financial crisis. Therefore, stimulus policy should be implemented cautiously.

Online publication date: Tue, 22-Oct-2019

The full text of this article is only available to individual subscribers or to users at subscribing institutions.

Existing subscribers:
Go to Inderscience Online Journals to access the Full Text of this article.

Pay per view:
If you are not a subscriber and you just want to read the full contents of this article, buy online access here.

Complimentary Subscribers, Editors or Members of the Editorial Board of the International Journal of Internet and Enterprise Management (IJIEM):
Login with your Inderscience username and password:

    Username:        Password:         

Forgotten your password?

Want to subscribe?
A subscription gives you complete access to all articles in the current issue, as well as to all articles in the previous three years (where applicable). See our Orders page to subscribe.

If you still need assistance, please email