Analysis Of Price Fluctuations In China

Since the reformation and opening up in china, the development of domestic economy was at a higher level of speed, and the economic construction has made noteworthy achievements in the world. But the road of reformation and opening up is not smooth. Judging from the price side, the price level in china has experienced many periodic fluctuations in 30 years. As an important macroscopic economic indicator, the price is also "the barometer" of economic development. So in essence the research on the price fluctuation is the analysis of the entire economic system which is conductive to the prediction and response measures of the future economic development. On the basis of studying the domestic and foreign literature theory and empirical analysis methods of price, this thesis give a detailed analysis of the domestic four periodic fluctuations on the prominent characteristics, trends and the main reasons, as while this thesis use a combination of theoretical and empirical analysis methods to study the in vitro and in vivo macro-economic factors 'effects on price fluctuations. Finally this thesis gives the policy recommendations on price stability.Firstly, we must select the appropriate index. The Consumer Price Index (CPI) is widely used as an important indicator of the extent of inflation or deflation, and it is also used in most of literature research on price fluctuations in china. In this thesis the annual CPI data from 1982 to 2008 is used to describe trends and characteristics in price fluctuations. Since 2000 the latter price fluctuations have the smaller ranges, and smaller period, there is limitation in the use of annual data. So this thesis also uses the monthly consumer price index inflation data to showing trends and characteristics in the latter price fluctuations. Through concrete analysis of four periodic price fluctuations, we find the different characteristics in the price fluctuations: their ranges have become smaller; the extent of fluctuations has changed from violence to moderation; the period of price rising has shorten from 6-7years to 1-2 years. At the same time, the reasons for price fluctuations have been fundamental changed: from policy fluctuations to the demand drive caused by contradiction between supply and demand fluctuations under a shortage of economy; into the imbalance of economic structural under the improved mechanism.The price has the closely relation with the macroscopic economic movement, with the result of the macroeconomic variables directly or indirectly effects on price. This thesis takes a combination of theoretical and empirical analysis methods in the analysis of the macroeconomic factors' effects on price. First, select the macro-economic variables: the money supply, the total retail sales of consumer goods, industrial added value, the total social fixed investment and imports and exports, to study the effect of total amount of these factors on the price fluctuations. Then this thesis takes empirical analysis methods, with firstly taking the variable and the five macroeconomic variables to linear regression separately. According to regression results, they show that the volume of money supply M2 (-1) and total retail sales of social consumer goods have the significant linear relationship with the CPI (%). Then we select those significantly factors to the multiple variables regression. This regression has the significant results, and has been tested right. Finally, this thesis gives the empirical conclusion that five factors in macro-economic system have effect on price fluctuations on some extent. At the same time, this thesis complements the influence of some factors outside the economic system: seasonal factor; consumer expectation and unexpected events, basing on the theoretical analysis, which provide a theoretical and empirical foundation for the following policy recommendations.As the market reformation and continuous improvement, macroeconomic regulation and control has become more and more sophisticated means. Price fluctuations in our country have transit to a relatively smooth stage, and it is difficult to re-appear violent price fluctuations. But in the short term will remain in a small range situation. Therefore, the government still needs to keep the close attention on domestic and international macroeconomic environment and the future trend of price, and make good prevention of the abnormal price fluctuations, with a good job in making prevention measures. The government must make the price stability as one of important goals, optimize the industrial structure, use the monetary and fiscal policies effectively, reduce the negative impact of the policy of expanding domestic demand, and prevent for the negative effects of price fluctuations on the economic development.