Research In The Impact Of China Agricultural Product Price Fluctuation On Economic Growth

With the economic growth, Chinese need much more commodities than ever. Chinese had become the important purchaser, but had not the pricing power. Agricultural products price stable is of great significance in China. The price of agricultural products adjusted rationally so as to mobilize the enthusiasm of the farmers for agricultural production. The reasonable price is a crucial act to safeguard food security, also to stabilize economic and social development. Commodity prices fluctuation have inflicted considerable loss to our economy. That inflicts our macroeconomic fluctuations either.There are a lot of problems in agricultural products price system in China. Prices of farm products are on the low side in general. The income of farmers is instability. As a result of so many years of practice, there are also some issues that need to be resolved. The defect of agricultural products pricing market mechanism determines those problems, such as excessive competition in agricultural industry, agricultural products circulation system determine price of farm products, the severe impact on the domestic market from the fluctuation in the price of international agricultural products, agricultural product price fluctuations by cobweb model, imperfect futures market of China, agricultural product market caused by information asymmetry, the weakness of grain industry and market failure determines.The paper studies the phenomena of between the agricultural products prices and economy growth in China, and focuses on the empirical analyses in agricultural products fields. This paper is also at the basis of the existing research, using economics, management, and other disciplines related theories. The main contents are in the following:(1)In order to obtain the balanced growth path in economy, the Neoclassical Economics accepts that the technical change must be Harrod-neutral. In the paper, we build an economic growth model with labor-and capital-augmenting technical change in the steady state. We divide the economy field into two department, agricultural economic department and non-agricultural economic department. We build multiple sectors economic growth models to each economic department through overlapping-generations model.(2)Farms products prices are the core elements in the agricultural market. The error of producers'price indices for Farm Products exist autocorrelation and conditional heteroskedasticity problem and has leverage effect. Using GARCH family models, we find that the volatility of Farm product price has an obvious a "pike-hick tai" phenomenon, non-symmetrical effect, an obvious volatility clustering characteristic, and zero-mean value characteristic. EARCH model can fit the non-symmetrical effect of Producers' Price Indices for Farm Products. When good news hits farm product market, the volatility of producers' price indices for farm products has big fluctuation. When bad news hits farm product market, the volatility of Producers'Price Indices for Farm Products is relatively stable.(3)This paper applies VAR model to study relations among farm product price, PPI and CPI. We find:GPIFPO has strong inertia, and it is influenced greatly by PPI and CPI. PPI is influenced greatly by CPI, but little by GPIFPO. CPI has strong inertia also. CPI is influenced greatly by PPI, but little by GPIFPO. In addition, our findings imply that PPI is not granger-cause fluctuations in GPIFPO whereas GPIFPO granger-cause changes in PPI. CPI is not granger-cause fluctuations in GPIFPO whereas GPIFPO granger-cause changes in CPI. There are bi-directional causalities between PPI and CPI.(4) Fluctuation in the prices of agricultural products is an important factor that impact China's stable economic growth and affect agricultural economy. This article mainly discuss how to construct the mold of ARMA for the economic time series of GPIFP of China (1979-2010) and how to forecast GPIFP value in short-term. The empirical analysis shows that the ARMA(5,1) model is stable and reversible. Using Eviews6.0software as analysis tools, the ARMA model is used to predict the GPIFP in the next three years (2011-2013). The study shows the prediction results are112,102,106respectively. The model can be used to forecast and analysis GPIFP. At the sane time the ARMA model can reflect effectively the dynamic change in GPIFP. It has the important reference value to harmonious development of our country agricultural product price market.(5)Agricultural products price fluctuation's influence on economic growth is found in the research. There exists significant long-term equilibrium relation between agricultural products price index and GDP index. Each1%increase in GDP, agricultural product price of short-term growth elasticity is0.29%, and the long-term growth elasticity is0.29%. When the agricultural products price index deviate from the long-term equilibrium relationship, restored to equilibrium is slow.(6)The paper analyzes the relation between Chinese GDP and the GPIFP from1979 to2010based on VAR model. The empirical analysis shows that:Fluctuations in the prices of agricultural products have a big impact on the first industry and the second industry, but have little effect on the third industry. Bidirectional transfer price between GPIFP and the first industry are not obvious. But reverse direction price transmission mechanism between GPIFP and the second industry. Impulse response shows that shock response is very sensitive, but the effect is not obvious.(7) In agricultural product pricing, There coexist the market prices of agricultural products and policy price. But the government needs to enhance the agricultural product market price regulation. It need establish an effective agricultural product price mechanism.