Associate Professor Changli HUANG and Professor Zhigang HUANG, who is the assistant dean of the School of Finance, published the paper “Money Demand for Open Economics in China Using ARDL” in Volume 17, No. 1 of “China Economic Quarterly” in 2017.

Abstract: This study examines China’s money demand function (MDF) for open economics. Our main findings are as follows: There exists a stable, long-run relationship between M2and its determinants: real income, nominal interest rate, inflation, RMB’s real effective exchange rate(REER),expected appreciation and foreign interest rates.MDF can be better captured by considering the exchange rate and foreign interest rate. Furthermore, portfolio-adjustment effect and expectation effect are obvious in the long run and short run, respectively. The rolling regression procedure is incorporated into the Autoregressive Distributed Lag (ARDL) cointegration test to investigate the stability of the cointegrating relationship.

Keywords: Open-economy Money Demand; RMB’s REER; Exchange Rate Expectation