EconPapers    
Economics at your fingertips  
 

DOES RESERVE ACCUMULATION LEAD TO ENDOGENOUS MONEY SUPPLY IN CHINA?

Xin Li (), Jiao-Jiao Fan, Chi-Wei Su () and Adelina Dumitrescu Peculea ()
Additional contact information
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

The Singapore Economic Review (SER), 2021, vol. 66, issue 05, 1321-1336

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.

Keywords: Reserve accumulation; endogenous money supply; bootstrap rolling window (search for similar items in EconPapers)
Date: 2021
References: Add references at CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://www.worldscientific.com/doi/abs/10.1142/S0217590818500042
Access to full text is restricted to subscribers

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wsi:serxxx:v:66:y:2021:i:05:n:s0217590818500042

Ordering information: This journal article can be ordered from

DOI: 10.1142/S0217590818500042

Access Statistics for this article

The Singapore Economic Review (SER) is currently edited by Euston Quah

More articles in The Singapore Economic Review (SER) from World Scientific Publishing Co. Pte. Ltd.
Bibliographic data for series maintained by Tai Tone Lim ().

 
Page updated 2021-10-28
Handle: RePEc:wsi:serxxx:v:66:y:2021:i:05:n:s0217590818500042