Currency Regulation and the Liquidity Diversion Mechanism between the Real Economy and Capital Market
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| Title | Currency Regulation and the Liquidity Diversion Mechanism between the Real Economy and Capital Market
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| Author | Wang Hao |
| Organization | School of Economics, Huazhong University of Science & Technology |
| Email | howwang@hust.edu.cn |
| Key Words | Currency Liquidity, The Real Economy, Capital Market, Diversion Mechanism, |
| Abstract | Guiding the adjustment of industrial structure and upgrading the supply structure are the major goals of monetary policy. In order to judge the effectiveness and targeted effect of monetary policy on industrial restructuring, the liquidity diversion mechanism between the real economy and capital market, and the difference that it performs in different industries and ownerships, are all measured in this paper. It turns out that liquidity growth of capital market is four times as much as that in the real economy. Also, the liquidity allocation has no significant difference among different industries and ownerships. Moreover, the industries with overcapacity have stronger ability to absorb funds. So it can be concluded that the monetary transmission mechanism and capital market pricing can not automatically identify the backward production capacity. Therefore, when using monetary policy to guide industrial upgrading, not only the siphon effect of the capital market should be suppressed, but also the policy targeting should be strengthened in the area of the real economy. |
| Serial Number | WP1147 |
| Time | 2017-01-10 |
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