The Cause Analysis Of China’s Inflation In Recent Years

Inflation is the unavoidable phenomenon with the development of economy, andalso is one of the most tightness tings concerned with the residents. After steppinginto the21th century, the fast rising prices have caused the wide attention. Especiallyafter the world financial depression, under the bad economic situation, goods price isstill keeping fast rising. Our country is more fluctuated by world economic factorsbecause of the policy of reformation and opening. The analogous world’s economicdepression might be occur in future, so it is significant to research the causes ofinflation under this particular economic and financial environment. This paper isaimed to analysis the factors which cause china’s inflation after the word financialrecession in2008, compare with the inflation before the recession, analysis the changeof the inflation causes and give the concerned suggestions.In this paper, we based on the past theories and researches, from the monetaryfactors、demand promote、cost push and input factors to research the characteristics ofthis inflation. We choose various indexes, use correlation and factor analysis, get5variables to represent the factors. Then we use VAR model, Granger test, impulseresponse function, variance decomposition to analysis the relationship between theinflation and the variables. We get the results that the inflation is caused by cost pushand demand pull, monetary factors are not the causes, input factors are not theremarkable causes through VAR model. The ECM model is used to deep analysis thecorrelation between the input variables. We find the import commodity price indexhas significant influences to domestic commodity prices index and consumer pricesindex which means the input inflation also is the characteristic of the inflation in somedegree.To demonstrate the inflation’s features under economic phenomenon, this paperalso analysis the characteristics of inflation before the recession, and do thecomparison. The results shows that the inflation before financial recession was mainlycaused by monetary and input factors, the cost’s and demand’s influences were notsignificant. The different causes indicate the different influence elements of theinflation. Based on the analysis, we give the suggestions from industrial policy,demand structure, fiscal and monetary policy, foreign exchange policy and so on.