IDEAS home Printed from https://ideas.repec.org/a/wsi/serxxx/v66y2021i05ns0217590818500042.html
   My bibliography  Save this article

Does Reserve Accumulation Lead To Endogenous Money Supply In China?

Author

Listed:
  • XIN LI

    (Antai College of Economics and Management, Shanghai Jiao Tong University, Shanghai, P. R. China)

  • JIAO-JIAO FAN

    (Antai College of Economics and Management, Shanghai Jiao Tong University, Shanghai, P. R. China)

  • CHI-WEI SU

    (School of Economics, Qingdao University, Qingdao, P. R. China)

  • ADELINA DUMITRESCU PECULEA

    (Department of Economics and Public Policies, National University of Political Studies and Public Administration, Bucharest, Romania)

Abstract

This study investigates the causality between reserve accumulation and money supply in China over the period of 2000:01–2016:11. The bootstrap Granger full-sample and sub-sample rolling window causality tests are utilized. The full-sample test supports that reserve accumulations lead to significant endogenous money supply. However, the sub-sample test suggests that the endogenous money supply caused by reserve accumulations mostly existed before 2007 when China implemented a compulsory exchange settlement system. Structural changes also exist as a result of the impacts of excess money supply and reserve accumulations, which suggests specific backgrounds should be taken into account when investigating this issue. The rolling window causality test provides a more accurate result when considering structural changes, which proves reserve accumulations are more likely to cause endogenous money supply in a compulsory exchange settlement system. The significant difference before and after 2007 suggests that the ending of the compulsory exchange settlement system is helpful to improve the monetary policy independence.

Suggested Citation

  • Xin Li & Jiao-Jiao Fan & Chi-Wei Su & Adelina Dumitrescu Peculea, 2021. "Does Reserve Accumulation Lead To Endogenous Money Supply In China?," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 66(05), pages 1321-1336, September.
    • Handle: RePEc:wsi:serxxx:v:66:y:2021:i:05:n:s0217590818500042
    DOI: 10.1142/S0217590818500042
    as

    Download full text from publisher

    File URL: http://www.worldscientific.com/doi/abs/10.1142/S0217590818500042
    Download Restriction: Access to full text is restricted to subscribers
    File URL: https://libkey.io/10.1142/S0217590818500042?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    More about this item

    Keywords

    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wsi:serxxx:v:66:y:2021:i:05:n:s0217590818500042. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Tai Tone Lim (email available below). General contact details of provider: http://www.worldscinet.com/ser/ser.shtml .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.