Empirical analysis of the relationship between China´s scale of national debt and monetary supply

Previous theory indicates that the scale national debt issuance has the currency expansion effect and some extent influence on the economy. This article has made an empirical analysis of the effect of China´s issuance of national debt on monetary supply by the economic date from 1994 to 2005. On the basis of previous research, this thesis studies the effects of China´s issuance of national debt on monetary supply, analyses the effects on all levels of monetary supply when the new issued national bonds were purchased, and presents that national debt issuance for making up financial deficit is not the primary cause for inflation.