Inflation Targeting Monetary Policy In China Reference

As one of worldwide problems, inflation is the critical factor which will effect the economic operation of nations. Serious inflation will not only baffle economic development, but also may initiate society and political crisis. As the common phenomena in economy, what are factors that impact inflation? By research, the expectation of economic man is one of the most important factors. So, studying inflation's appearances, analyzing inflation expectancy and looking for the methods to contain inflation are of things which full of academic and political meaning. This article traces back to the research approaches about the theory on inflation expectation in the history of economic theory development at first, and have drawn the conclusion that to stabilize the public expectation is a valid method for controlling inflation through theoretical deduction. Then, the article especially introduces the intension and application made of the inflation targeting, a young monetary policy frame used widely worldwide in recent years, and proves its necessity existing in practice. In Chapter Three, it is analyzed first the theoretical foundation of inflation targeting, and the function mechanism of controlling inflation through stabilizing the expectation is probed into. Then the unique advantage of such brand-new monetary policy frame when used to control anticipation has been explained with practical experience. Though under the reasonable anticipated assumption prerequisite, the anticipated behavior of economic man will have an important impact on the forming of inflation, however, with some scholars' findings, in a real condition it is very difficult for people to reach the rational expectancy level, so such research about the impact on inflation can only often remain theoretically. In view of those, based on the monthly CPI index in China from January of 2001 to December of 2009, and by using relevant measure modes to examine the real example, the article probes into the relationship between inflation and inflation expectation in our country through analyzing the real example result. Finally, the article scrutinizes and discusses the current situation of our country's monetary policy in term of expecting, and puts forward some suggestions on the monetary policy from stabilizing inflation expectation.