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| Author: | Sun, Huashu |
| Title: | An analysis of the endogenous money theory shows the necessity of reducing interest rate (original in Chinese) |
| Journal: | Economics Information (c)
1999 : 7, p.25-28 |
| Index terms: | MONEY SUPPLY INTEREST RATES MONETARY POLICY CHINA |
| Language: | chn |
| Abstract: | When the currency is very endogenous, the major monetary policy should be the adjustment of interest rate, not to overstress the control of the volume of money. To adjust the demand for money by changing the interest rate, the money supply will automatically adapt to the changes of money demand. The adjustment of the interest rate is direct while the changes of money supply are indirect. Although the endogenous money supply makes the central bank lose the absolutely controlling power over money, it can carry out expansionary or contractionary monetary policies by adjusting the interest rate. Reducing the interest rate should be the main monetary policy in a short-term. |
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