Neutral Or Non-neutral Nature Of Money: Metal Monetary System And Paper Monetary System Of China

This article have researched a monetary neutrality problem of China from theperspective of the development of currency history.In order to discuss the currencyneutral problem respectively under different monetary system in China,Chinesemonetary system can be divided into metal monetary system and paper monetarysystem according to the characteristics of Chinese historical period of monetaryeconomy.As to metal monetary system,we elect the annual data of China from1887to1935and use the FS simplified model to analyze,and the results show that monetaryneutrality gets strong support for a long time.And under the system of Paper monetary,basing on the selection of the first quarter of1998to2012in the third quarter data,weelect those methods of impulse response analysis and variance decomposition,vectorerror correction model and granger causality test.The result shows that China’scurrency nature show the short-term non neutral and long-term neutral characteristics.Finally, based on the above findings, we give corresponding proposes to help themonetary policy to regulate the economy of China.