Empirical Research On Undulant Differences Of Regional Price In China

The price fluctuation has been the major economic issue of our country in the international community, also maintaining price stable is always considered as one of the four major objectives of macroeconomic regulation and control in the world. Since the reform and opening up, inflation problem is especially prominent while economic of China increases rapidly which accompanied with relatively large macroeconomic fluctuations. Reviewing reform and opening up in30years, China economic goes through four time’s large inflation, which has a serious impact on the stable and rapid economic development. However, the international economic situation is complex in the current stage, the rate of inflation is very high in China’s economic development, and its impact on the economy can not be ignored. The21st century is an important period for strategic opportunities in the China’s economic development, in this crucial critical stage of development of market economy, overcoming difficulties of high inflation is very crucial, combined with China’s regional economies, our government should be take efforts to adjusts China’s regional economic structure and development trend, which plays a crucial role in effectively inhibiting international financial crisis in our country. Therefore, price research will be a key analysis area for governance to solve inflation in China.In this research, we will intend to analyze the spatial relationships and stylized facts of the Consumer Price Index with food price index, income, regional GDP, fixed assets in the China’s31provinces and municipalities, autonomous regions from2000to2010, using of spatial econometric analysis method and panel dynamic simulation model. The study concluded that:First, the volatility price level in regional exist convergence; Second, price fluctuations in the various regions show differences; Third, the impact that food price index take on consumer price index is positive and significant; Fourth, the revenue growth factors plays a secondary role in stabilizing China’s regional price fluctuations; Fifth, the impact that fixed assets take on consumer price index is positive and unapparent; Sixth, the impact that regional GDP take on consumer price index is not significant; Seventh, macroeconomic policies of the regional identity to solve forward price volatility is significant.Through empirical analysis of regional price fluctuations, the regional price fluctuations not shows the overall volatility in China, but spatial convergence, which regional price fluctuations will gradually converge in the economic development, which means that regional price fluctuations can reach equilibrium through optimal allocation of regional elements. Coupled with regional factors allocation that place impact on CPI is different in China, differences of regional factors not only create the conditions for regional price equilibration, and give a reference to analyze price fluctuations in China’s major regions. Through panel data simulation of regional price, regional food price is the main reason for the regional price fluctuations, income level places a secondary role in effecting CPI, government should regulates regional food price and income to regulate control CPI level, which can lay the foundation for stable and rapid development of China’s economic.According to the characteristics of research ideas in this research, the paper is organized as follows:The first chapter is the introduction. This chapter describes the background, ideas and methods about theme and literature review related inflation in China. Firstly, describing inflation theory; Secondly, the formation mechanism of the above inflation theory through summarizing the relevant conclusions of the empirical research in China; thirdly, summing up differences of price volatility literature in regional economic development; and finally, commenting on previous research of price.The second chapter is a explanation of first chapter. This chapter describes the various factors affecting the price, such as income factor, regional economic growth, fixed assets factors, technical factors, currency factors and food price factors, and all these factor’s mechanisms, illustrating data sources and paving the way for further analysis.The third chapter is using spatial econometric methods to analyze the regional dependence on rising price in China. In this section, firstly, giving a brief overview on space model of the regional rising price, then we take the empirical research on spatial mechanism that regional income, regional economic growth factors, fixed assets, technical factors and food price to regional price.Fourth chapter is the fixed effect model analysis on differences regional price. In this section, firstly, using unit root method test all the variables; secondly, combined with the conclusions of the previous section, we want to analyze the wave characteristics of regional price through the fixed effects model, finding the main cause that effects regional price. And analyzing deviated coefficient which affects the regional price fluctuations can certificates that the regional food price and income levels have a significant impact on regional price fluctuations.Fifth chapter is using panel dynamic method and impulse-response functions to analyses the main factors which affect the regional price fluctuations. In this section, analysis method included:PVAR model, impulse-response functions, variance decomposition method, all these methods can analyze the dynamic characteristics of the regional food price, income level and other related factors on the price fluctuations.The sixth chapter is the conclusion. Combined with the conclusions of the previous section, this chapter is to clarify the linkages between them and put forward policy recommendations of the regulation of regional price fluctuations.