Since The Reform And Opening Up China's Urban Unemployment And Inflation Study

Price stability and full employment are both important objectives of macroeconomic policy. However, problems of unemployment and inflation troubled macro-economic policy-makers around the world. The traditional Phillips curve put forward a menu selection for government decision-making. It shows that full employment and price stability are mutually exclusive. Government has to make a choice between low inflation with high unemployment rates and low unemployment rates with high inflation. Phillips curve provides a useful and intuitive tool for us to study the problem of unemployment and inflation. The empirical research shows that during China's reform and opening up practice we are always confronted with inflation and unemployment. Regression analysis based on statistics of inflation rate and output gap of years of 1978-2009 showed that the Phillips curve based on the output gap and inflation anticipation is expected to exist in China. The regression analysis also shows that a positive relationship exists between inflation rate and output gap and inflation anticipation. That is to say, if the gap of the current actual output deviation from potential output increases or the inflation anticipation increases, then the inflation rate is to rise. This regulation of prices and employment, This provides a theoretical support for macro-economic policy-makers to take appropriate measures to manipulate and control price and employment. Research in the output gap found that there is certain inertia in China's macroeconomic development.