This paper investigates the situation of money supply and demand in China in recent years by means of the actual monetary gap, and further analyzes the short-term impact dynamics between China's real money gap and output gap and inflation rate through impulse response function. The results show that the real currency gap in China has obvious characteristics of cyclical fluctuation, and it is closely related to the major macroeconomic variables such as product gap and inflation rate, which can be used as a useful basis for macroeconomic regulation and monetary policy evaluation in China.

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