The Relationship Between The Changes Of CPI, PPI And The Real GDP Growth

In the construction of socialist market economy, one point is very important. That is using the lever action of price to allocate resources efficiently and to promote economic growth. In addition, price can affect people's life and production of goods and service directly. The change of price is not only related to economic growth, but also related to people's welfare. Study on the relationship between price and economic growth and understanding the objective law of it, are very important to better mastery of the law of market economy and construction of socialist market economy.In this paper, we use Granger causality test and ECM model to test the relationships of CPI, PPI and real GDP growth rate, and to get their relationships. Then, use ARCH model to analyze the dependence of waves on external conditions; use ARCH-M model to analyze the existence of "bonus of risk"; use TARCH model to analyze non symmetry of waves when positive and negative impacts exist. We suggest that the changes of CPI, PPI and real GDP growth rate depend on similar external conditions; CPI has more significant relationship with real GDP growth rate; but PPI appears more similar waving characters to real GDP growth rate, when facing negative impacts. Therefore, the change of PPI must be considered. Further, the relative changes of CPI and PPI have important effects on real economy. We should consider the changes of CPI and PPI, from the perspective of price structure, to analyze the relationship between the change of price and economic growth.