The Past Decade China's Monetary Research

At first the essay makes a summing-up on the preceding statements on the subject of the monetary neutrality. As to the theoretical analysis, the essay has made a particular discussion from pre-classical monetary theories to the classical monetary theories, and to the monetary policy neutrality theory, and then to the new-classical monetary theories. As to the practical and realistic analysis, the essay has also made a classified discussion on the foreign research and also on the national research. In this part of the essay, the author point out that the classical monetary theories are the long run monetary neutrality theories.After the summing-up of the preceding theories, the author tries to use the models and graphs to analyze the monetary neutrality problem. The essay uses a theoretical construct, the aggregate market to systematically think through the nexus of the economic decisions and interactions that take place in an economy. In this model the aggregate market is divided into three markets: financial market, goods market, labor market, bonds market and materiality capital market. In the model, the three groups of decision-makers are households, firms, and the government. Then the essay uses the model to analyze the monetary neutrality problem and the non-neutrality problem.After the theoretical discussion, the essay has made a practical analyze. The essay has gathered the data of the GDP, M2, and price index through 1994 to 2004, over the observation of 44 periods. The author first made a Unit-Root Test on the data, and then made a Grange-Causality Test, and then made an Engle-Grange equation. At last, the essay has drew a conclusion, that is: RGDP,=12268.15 +2.206913 â–³M2, +e .The result of the practical discussion shows monetary neutrality of our nation over the late ten years.