The driving factor of capital flow and the structural asset bubble——an analysis based on the gravity model
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| Title | The driving factor of capital flow and the structural asset bubble——an analysis based on the gravity model
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| Author | Li Lasheng , Huang Xiaoxiang and Zhang Huipeng |
| Organization | China Center for Economic Statistics Research，Tianjin University of Finance & Economics |
| Email | lilasheng@tjufe.deu.cn；1398406187@qq.com； |
| Key Words | Eextended Quantity Equation of Money; Structural Asset Bubble; Capital Attraction; Combined Effect |
| Abstract | In the framework of the Extended Quantity Equation of Money, this paper using the gravitational model in physics, investigates the driving factors of money flow in the internal structure of The Real and Fictitious Economy from the theoretical and empirical aspects, and reveals the structural asset bubbles in the internal structure of The Real and Fictitious economy on the basis of the dynamic characteristics of the driving factors. The results show that: under the modern economy, the over-plus money supply is only a sufficient condition for the formation of structural asset bubbles, rather than a necessary condition. The main driving force of the structural asset bubble is the non-equilibrium of the market's attractiveness to money and its combined effect. The logic is that the imbalance of attraction determines the unbalance of money capital flow and velocity, and the combined effect determine the sustainability of this non-equilibrium. Sustainability means that prices of assets in the market whose attraction is greater will continue to rise, triggering asset bubbles. Finally, according to the function and the way of control of monetary policy in our country and structural asset bubbles, we give corresponding policy recommendations. |
| Serial Number | WP1238 |
| Time | 2017-11-10 |
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