Monetary Liquidity and Market Liquidity:Volatility and Risk

The relationship of monetary liquidity and market liquidity has become the focus of participants in the stock market now.This paper analyzes the contact of monetary liquidity and market liquidity,empirically studies the fluctuating relationship of monetary liquidity and market liquidity,and the effect of monetary liquidity on market liquidity risk.The research shows M2 and M1 are dynamically negatively related to market illiquidity,while M0 is not related to market illiquidity.The positive impulse of M2 and M1 can reduce market liquidity volatility risk to a certain extent,while M0 can increase market liquidity volatility risk.Market liquidity risk itself is the biggest factor which affects the following market liquidity risk.