Research On The Formation And Guidance Of Public Inflation Expectation Based On Internet Information Searches

Public inflation expectation is the expectation of the public on the direction and degree of inflation in the future.It is an important basic concept in the study of modern economic theory.It is an important tool of monetary policy to guide the inflation expectation of the public in order to better achieve the goal of monetary policy.Since the official proposal of the public inflation expectation management in 2009 in China,the recognition of the importance of the public inflation expectation guiding has been deepened in academic circles and the monetary authorities,but the effect of monetary policy is not satisfactory,and there are not many measures to guide expectations.The primary reason is that the formation mechanism and the guiding mechanism of the public inflation expectation of China are not well studied.Through literature review,we found three deficiencies: The first is that the rational expectation hypothesis,the basis of modern expectations theory,is too strict with the conditions,and the formation process of expectations just like a ‘black box',which does not explain the formation of public inflation expectation in reality.Secondly,domestic researches focus on the one-way transmission of the monetary authorities' influence on the public's inflation expectation,and researches on how the public's inflation expectation changes and feedbacks after the implementation of monetary policy tools are insufficient;thirdly,the Internet has profoundly changed the way of information transmission,which would inevitably affect the process of public information acquisition and studying,and may cause the formation mechanism and fluctuation characteristics of public inflation expectation to change,but so far,there are few related researches.Based on this,this paper conducts a research from the perspective of learning,interaction and Internet,construct the formation model and create a quantitative index of public inflation expectation based on Internet information searches,and makes an empirical analysis on the influence factors in the formation and guidance of public inflation expectation,the correlation with macroeconomic fluctuations and the implementation of monetary policy in China,so as to provide a useful reference for China's monetary authorities to improve the mechanism for guiding inflation expectation and enhance the effect of monetary policy conduction.In the aspect of theoretical research,this paper introduces the Adaptive Learning model into the New Keynesian Dynamic Stochastic General Equilibrium model,which is the dominate macroeconomic analysis framework in recent years.In this model,the public expectation and monetary authority expectation are distinguished,the public network information acquisition parameter is set up,and the theoretical framework of the formation mechanism of the adaptive learning of public inflation expectation based on the network information searches is structured.The paper explains the interactions between the public network information acquisition and the expection guidance of monetary authorities in the Internet environment through the analysis of the convergence conditions of equilibrium state of the model.Further,through the dynamic improvement of classical M-S model and the construction of multi-objective asymmetric information game model and an implicit function model,this paper reveals the cooperation and game process around information between the public and the monetary authorities,analyzes the factors that influence the expection guidance effects in the Internet environment such as the adequacy of public network information acquisition,the degree of public's trust in monetary authorities,the accuracy of monetary authority information disclosure and the uncertainty of monetary policies.In the aspect of empirical analysis,this paper introduces the Internet big data processing methods into the inflation expectation quantitative approach,and synthesizes The Public Learning Information Access Index(PIAI)as the quantitative index of public inflation expectation based on Baidu Search Index with the range extraction method of keywords and principal component analysis etc,which help to realize data dimension reduction.The Information Disclosure Index(HI)of monetary authorities is synthesized as a quantitative index of expectation guidance,applying the text information extraction method supplemented with artificial identification.Both of them help to provide core data for the analysis of the public inflation expectation in the dynamic changes of macroeconomic system.Based on these two indicators with the data of China from 2006 to 2019,using SVAR model with parameter constraints that can reflect the actual situation,the impulse response maps among public inflation expectation,information disclosure of monetary authorities,intervention variables of monetary policy and key variables of macro-economy are drawn;using FAVAR model which the common factors of broad representative macro-economic variables are extracted into,decomposing the whole impulse responses with the method of equal width sliding window,the relationship between public inflation expectation and macroeconomic fluctuation stimulated by monetary policy is analyzed in depth.Finally,using the Markov-Switching Vector Autoregression(MS-VAR)model by introducing the Uncertainty Index of Monetary Policy,the paper makes an objective and reasonable regional division according to the fluctuation characteristics of the endogenous variables of the model,so as to examine the expectation guiding effect in different periods.The main conclusions of this paper can be summarized as follows:(1)the integration of the Adaptive Learning Theory and the New Keynesian Dynamic Stochastic General Equilibrium model better explains the formation mechanism of the public inflation expectation in Internet environment in China.There is a continuous learning interaction between the public and the monetary authorities.Network settings not only create conditions for the public to improve the adequacy of their own information access,but also provide spaces for the monetary authorities to disclose information more quickly and accurately,meanwhile enlarge the interaction between them.(2)The cooperation and game between the public and the monetary authorities around information determine the effect of expectation guidance.The convenience of network information access greatly improves the accuracy of private information,and the ‘independence' of the public inflation expectation is enhanced.Monetary authorities must further improve the accuracy of the information disclosure,in order to take the initiative in the information game with the public.(3)In the internet environment,China's public inflation expectation has a significant impact on the implementation of the monetary policy.With the strengthening of the public's access to information about macro-economy,financial data and policy trends through Internet searches,the public expectation formed through indepth learning is close to the rational expectation,but it can reduce the output,inflation and their fluctuations that stimulated by a monetary policy to a certain extent,then weakens the regulatory effect of the monetary policy.(4)Influenced by the uncertainty of the monetary policy,there is a significant nonlinear effect in the process of expectation guidance in China.The characteristics of rational expectation only appear when the uncertainty of the monetary policy is low.In the period of high uncertainty of the monetary policy usually with frequent operation of monetary policy,the positive interaction between the formation of the public inflation expectation and the expectation guidance of monetary authorities is broken,and the effect of expectation guidance and monetary policy implementation is weakened,which increases the uncertainty of the monetary policy in turn.The existence of this non-linear effect makes more demands on decision-making and the expectation guidance of the monetary authorities in China.The monetary authorities should further strengthen the monitoring of the public inflation expectation,balance between the two major monetary policy objectives which usually points to economic growth and inflation stabilization,set different guidance modes of expectation guidance in different periods,and improve the pertinence and fineness of information disclosure.