Monetary Equilibrium
2.It is proposed that in order to improve the independence and flexibility of monetary policy, China should reform present exchange control system, enhance the open market operation and facilitate the equilibrium of the balance of payments.
3.Money gap is the disparity between nominal volume of money supply and equilibrium of money supply, which is meaningful for the central bank to make decision and carry out monetary policy in macroeconomic regulation and stability of exchange rate.
4.After using three methods of estimating equilibrium of money supply, we can draw these conclusions: (1) The money gap presented business cycle character from 1978 to 2004. (2) From 1994, the fluctuated extent of money gap decreased, which means the efficiency of monetary policy raised steadily. (3) The money gap has the forecast function of extreme in business cycle.
