Financial development and relationship evolvement among money supply,economic growth and inflation: a comparative study from the U.S. and China |
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| Authors: | Xiaolin Lu Kun Guo Zhi Dong Xuan Wang |
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| Affiliation: | 1. Research Center on Fictitious Economy &2. Data Science, Chinese Academy of Sciences, Beijing, P. R. China;3. School of Economics and Management, University of Chinese Academy of Sciences, Beijing, P. R. China;4. Post-Doctoral Research Center of Industrial and Commercial Bank of China, Beijing, P. R. China;5. Key Laboratory of Big Data Mining and Knowledge Management, Chinese Academy of Sciences, Beijing, P. R. China;6. School of Economics and Management, University of Chinese Academy of Sciences, Beijing, P. R. China |
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| Abstract: | With the rapid development of financial markets, economic financialization degree can no longer be ignored for its influence on the relationship among money supply, economic growth and inflation. Combined with the horizontal comparison of China, this article concentrates on the financial development and evolution from the period of industrialization to economic financialization in the U.S., systematic and comprehensive analysis is first done on the variation of overall economic operation. Then impulse response function based on VAR model is applied to study the dynamic influence of economic financialization degree on the relationship evolvement. The empirical results show that economic financialization makes good explanation of the deviating phenomenon among money supply, economic growth and inflation, and the interactive relationship between fictitious economy and real economy is becoming closer and closer. Furthermore, compared to the U.S., China still belongs to the process of transforming from the period of industrialization to economic financialization. |
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| Keywords: | Money supply economic growth inflation economic financialization |
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