How does “time-lag currency” drive economic and social development in China?

Lidan Yang and Shixiong Cao ()
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Lidan Yang: Minzu University of China, School of Economics
Shixiong Cao: Minzu University of China, School of Economics

Journal of Social and Economic Development, 2025, vol. 27, issue 3, No 17, 1094 pages

Abstract: Abstract Urbanization and industrial development require huge amounts of financial support, and the capital shortage created by the consumption of funding by economic and social upgrading is ultimately a currency problem. The development experience of various countries has shown that a time lag exists between issuing more of a currency and the onset of inflation, which means that there is a large amount of “time-lag currency” that can be used to promote economic and social development without negative consequences such as inflation. Rational use of this currency can be extremely economically beneficial because it can promote urbanization simultaneously with economic and social development. In this paper, we describe the economic significance of time-lag currency and how to harness it and show how China has successfully used time-lag currency to drive urbanization and modernization through its strategies for issuing and utilizing this currency without triggering high inflation rates. Given the risks of issuing too much currency, it is important to clarify how to effectively take advantage of currency expansion to develop the economy while avoiding potential financial risks. Our results demonstrate the importance of the time-lag currency strategy for economies around the world, since this approach both increases the efficiency of currency utilization and sustains economic development. Time-lag currency therefore represents an important direction for future economic research.

Keywords: Currency supply; Time-lag effect; Inflation; Infrastructure construction; Virtuous circle (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s40847-025-00420-5

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