Research On The Assets Price And The Inflation Rate Of China

The stability of price is the ultimate goal of a nation's macro economy. In the past 20 years, the central banks have made great achievements in controlling the inflation of ordinary goods and services . But frequent fluctuation of asset prices , as well as several systemic financial crisis and economic depression caused by the collapse of asset markets, have forced the authority to research deeply the information conveyed by the asset price fluctuation, and to resolve it.As the rapidly development of our stock market since 1990s, the financial assets in residents' asset structure is increasing continuingly and the fluctuation of it has strong influence on macro economy. In the process of marketization in our country's real estate market since 1998, accompanied by the price of real estate goes up, real estate has become a hot investment vehicle besides the stocks and securities. The research of the relations between the fluctuation of the assets price and the inflation has been put on schedule.By analyzing the information embedding in the asset price, using the latest yearly and monthly data to employ the empirical test, the paper not only quantitate the relations between the assets price and the inflation, but also study the topic whether the assets price should be included in the cause. On the other hand, compare and contrast the differences between the ICLI which embedding the assets price and CPI to detect the efficiency of the inflation index which including the assets price.In the article we first survey the alternative theories of incorporating asset prices into price indexes, and then examine the relative practices. Base on the theory and practice, the paper discusses the relationship between assets prices and real economy and inflation ,and proves that fluctuation of asset prices has the effect on macro-economy, financial stability and monetary policy as well as the difficulty of the asset prices of asset prices as the target of monetary policy regulation. Finally, the author points out that the central bank should pay much more attention to the changes of asset prices and further improve the monetary policy system.