Research On The Causes Of Inflation

Since the1930s, inflation had continued to be widespread concerned by scholars of all the world, it can have a significant impact on achieving economic goals, improving the efficiency of resource allocation and distributing income fairy. After the reform and opening up, China has experienced several times of significant inflations, every time it occurs, it always brought out much serious consequences to China’s economy. In particular, the outbreak of the global financial crisis on2008, a series of government macroeconomic measures taken to alleviate the economic crisis, coupled with various countries exchange rate war trade war, cost of war, and a large number of international hot money flows, etc.,promoting our country a new round of inflation pressures on2010.Chose the reasonable policy measures to control inflation,so as to promote the balanced development of the economy has become the focus of national efforts time after time, but the key to achieve this goal is grasping of the causes of inflation. Faced with the current complicated international environment, making the various economic factors are causing our economic fluctuations and become the causes of inflation, but of all these factors, the mainly reflected currency factors will concern demand factors, cost factors, input factors, expected factors and structural factors. Moreover, taking into account the inflation in China has obvious stages and certain periodicity, which may make the reasons for the formation of inflation in different stages are different.This paper uses a qualitative and quantitative analysis method, basing of previous studies made on the review, systematic analysis the causes of the current impact of general inflation, and using the monthly data of2002-2012as a sample, according to the inflation in recent years, dividing these data in three stages as2002-2005,2006-20082009and2010-2012, put each of the various stages of data to Granger causality test, VAR model parameter estimation, impulse response functions and variance decomposition, finally combined with specific conditions, the final conclusions are as follows:Among all the factors, expectations and input factors are common causes of factors affecting inflation in China between2002-2012:the continuing impact of the expected inflation factors indicate that there is a big inertia; while the input factors of inflation impact is mainly due to the perennial trade surplus and foreign exchange reserves, which led to the influx of international hot money caused rising.Besides the expected factors and input factors are common causes of inflation in the entire study period was generated, the causes of inflation during the rest are different:2002-2005years, inflation causes of this stage is the demand factor.,it Attributed to the source of net exports-led growth in demand after join in WTO;2006-2009years, the causes of inflation at this stage is to demand factors and monetary factors. Where demand factors are the dominant factor, it attributed to the strong investment demand led growth;2010-2012years, the causes of inflation at this stage is the cost factor and currency factors, the main incentive is the cost factor, it attributed to the industrialization and urbanization prices and international agricultural prices caused by our raw material costs. Finally, based on the empirical results, the paper focus these causes to put forward some policy recommendations.