Research on dynamic impact of monetary supply on agricultural industry and food price

In this study, we study the impact of money supply changes on food prices by using VAR model. The model set and test are based on the rigorous analysis of co-integration relationship between money supply and food prices, then we make empirical analysis to study the impact of money supply changes to food prices. The result shows that there is a long-term stable relationship between money supply and food price. The money supply and output shocks have different impacts on food prices: the effect of money supply on food price is obvious. Also, the increase of money supply will promote the food price sustained growth in the long time. On the other hand, the increase of GDP will lead to the decline in food prices and make price level tends to be stable.