摘要：This paper attempts to study the relationship between China’s current money supply and inflation. We do an empirical study by establishing a stable money demand model in long-term during the period from the first quarter of 2000 to the first quarter of 2011. The results show that there exists a cointegration relationship among the variables of money supply, price index and gross domestic product, interest rates, where money supply is highly correlated with CPI, the oversupply of money could lead to the decline of interest rates with the subsequent phenomenon of excess liquidity, and the excess liquidity contributes greatly to China’s current inflation in turn.
关键词：Abusing publication of currency;Excess liquidity;Inflation;VAR
