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Why the Quantity Theory of Money Is Not Applicable to China, Together with a Tested Theory That Is

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  • Peebles, Gavin

Abstract

Using data for the period 1952-88, this paper argues that any statistical relationship between money and prices is not evidence of causation running from money to prices but is due to the consistent nature of planners' reactions to purchasing power imbalances. This is not an econometric study. Historical, institutional, and simple statistical analysis is used. An outline, descriptive picture of money development for this period in China is offered.in the light of the simple theory applied here. Parallels with post-Keynesian monetary theory are suggested. Two appendixes explain the narrow money supply process and present all the data used. Copyright 1992 by Oxford University Press.

Suggested Citation

  • Peebles, Gavin, 1992. "Why the Quantity Theory of Money Is Not Applicable to China, Together with a Tested Theory That Is," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 16(1), pages 23-42, March.
    • Handle: RePEc:oup:cambje:v:16:y:1992:i:1:p:23-42
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    Cited by:

    1. repec:pri:cepsud:98chow is not listed on IDEAS
    2. Geneviève BOYREAU-DEBRAY, 1998. "Money Demand and the Potential of Seigniorage in China," Working Papers 199821, CERDI.
    3. Chengsi Zhang, 2013. "Monetary Dynamics of Inflation in China," The World Economy, Wiley Blackwell, vol. 36(6), pages 737-760, June.
    4. Chi-Wei Su & Jiao-Jiao Fan & Hsu-Ling Chang & Xiao-Lin Li, 2016. "Is there Causal Relationship between Money Supply Growth and Inflation in China? Evidence from Quantity Theory of Money," Review of Development Economics, Wiley Blackwell, vol. 20(3), pages 702-719, August.
    5. Mookerjee, Rajen & Peebles, Gavin, 1998. "Endogenous money in China: Evidence and insights on recent policies," Journal of Asian Economics, Elsevier, vol. 9(1), pages 139-158.
    6. James S Laurenceson & Callan Windsor, 2011. "How Effective is China’s Monetary Policy? An assessment of the link between the growth of monetary aggregates and inflation during the 2000s," Discussion Papers Series 435, School of Economics, University of Queensland, Australia.
    7. Hasan, Mohammad S., 1999. "Monetary Growth and Inflation in China: A Reexamination," Journal of Comparative Economics, Elsevier, vol. 27(4), pages 669-685, December.
    8. Gregory Chow & Yan Shen, 2004. "Money, Price Level and Output in the Chinese Macro Economy," Working Papers 104, Princeton University, Department of Economics, Center for Economic Policy Studies..

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