The Cause Of Inflation In The Post-financial Crisis Era Of China

After the second half of2008, the global financial crisis started，the economy of thecountries all over the world had sunk back to lower state. In order to keep economicstability of our country、to stimulate economic growth, under the correct leadership of theCPC central committee and the state council, our country implemented proactive fiscalpolicies and moderately easy monetary policies. These policies help our country tosuccessfully resist the financial crisis、to firstly realize the economic recovery. But at thesame time, the economy has gradually improved, the related factors of inflation hasgradually been accumulated, eventually, this situation led to a new round of inflation of awide scope and a spread duration, a new round of inflation has been called the Post-financialcrisis era.In the paper, the final choice of“the general and sustainable rise of the prices of goodsand services”was to define the inflation, the final choice of consumer price index (CPI) wasto measure the price level of our country. According to the INF=CPI–100, to calculate therate of inflation, INF said the rate of inflation. In the paper, the empirical part was based onthe monthly data of between January2010and March2010in our country. According to thetheory of the causes of inflation and the research review of the causes of inflation，thecauses of inflation in China were divided into six categories: monetary factor、demandfactor、cost factor、structural factor、input factor、expectational factor. And from the sixsides,54indicators were selected as the variables to analyze the reasons of inflation of thePost-financial crisis era. According to the factor analysis method, the ADF test, the J-Jcointegration test， the Granger causality test， the impulse response function and thevariance decomposition, to verify which indicators are the causes of inflation.Specific empirical steps: The first step, according to the factor analysis method, themultidimensional data variables were reduced, in order to avoid reduction of public factorswhich covered the economic meaning and information of the original index variables,according to the public factor scores and their variance contribution rates of each publicfactors, the comprehensive variable of monetary factor、the comprehensive variable ofdemand factor、the comprehensive variable of cost factor、the comprehensive variable of structural factor and the comprehensive variable of input factor were calculated. The secondstep, according to the ADF test, the original series of monetary factor、demand factor、costfactor、structural factor、input factor、expectational factor and the rate of inflation werenon-stationary series,and their first-order difference sequences were stationary series, that is,they were integrated of order. The third step, as a result of FM I(1)，FD I(1)，FCI(1)， FS I(1)，FI I(1) and INF I(1), the cointegration relationship of the FM、FD、FC、FS、 FI and INF was to make J-J cointegration test to draw a conclusion：monetary factor、 demand factor、 cost factor、 structural factor、 input factor、expectational factor and the rate of inflation had long-term stable equilibrium relationship.The fourth step, according to the value of the LR，FPE，AIC，BC，HQ,the optimal lagorder number of the multivariate VAR model was determined2, so as to establishmultivariate VAR (2) model, the reciprocal modules of the characteristics root of VAR (2)model were less than1, so VAR (2) model was stable.By the Granger causality test,Wefound further that monetary factor、demand factor、cost factor、input factor were thecause of inflation, structural factor was not the cause of inflation. The fifth step, the Grangercausality test reactes merely a partial dynamic relationship, further by means of impulseresponse function and variance decomposition,they captured full complex dynamicrelations. the study discovered that: the contribution rate of expectational factor、 monetaryfactor、demand factor、input factor to the inflation were bigger,they were the principalcauses of inflation.The empirical conclusions: after the financial crisis era in our country, the main causesof inflation are expectational factor、 monetary factor、demand factor、input factor.In thepaper, because comprehensive variables of all factors were based on multiple index variablesof all factors by factor analysis, the comprehensive variables of expectational factor、monetary factor、demand factor、input factor were decomposed to get impact of eachpublic factor on inflation and respective corresponding strategies.