Abstract:
Modeling the 19922012 annual economic and financial data of the G20 country by means of mediator effect testing and model of panel smooth transition, an empirical analysis was made of the nonlinear transfer of production, price effect and transmission mechanism of the microcurrency under the variation control of monetary policy. The results show that the priceadjusting effect of currency quantity was prominent but not sensitive in affecting production, that the control of currency quantity made effect by the mediating means, such as interests, exchange rates and loan, and that with changes in variations of different means, nonlinear transfer occurred to the effect of monetary control. Modeling respectively the Group of Eight and the eleven major emerging industrialized countries finds that the size of variations of the three means differs clearly. This heterogeneity is determined by comprehensive elements, including differences in level of interests marketization, degree of improvement of banking market, degree of opening door to the outer world and level of international capital fluid between developed and developing countries. A demonstrated conclusion indicates that the effect of production of currency quantity remains neutral in the long run and that China should be cautious in regulating and controlling economic growth by the size of monetary quantity.
