The Time-varying Weight Model In The Application Of China’s Macro Economy

This Paper is mainly to research some characteristics of Chinese macroeconomic based on time-varying weight in the past more than ten years. Because aggregate demand and aggregate supply is the core of macroeconomic, and consumption is crucial to our aggregate demand, also industry is crucial to our aggregate supply, so we choose CPI and PPI as our analysis core.We decompose CPI to its eight basic classification so as to acquire each weight, then we can explore the evolution of the Chinese residents’consumption characteristics. By decomposing CPI to urban and rural areas basic classification so as to acquire each weight, then we can explore the dual economy of urban and rural. We decompose PPI to light and heavy industry in order to obtain the respective weight, in this way we can probe into the evolution of the Chinese industry production. By further decomposing heavy industry to extractive industry, raw material industry and processing industry, then we make use of the acquired weight of each to analyze the intern evolution of heavy industry. Also we decompose light industry to using agricultural materials and using non-agricultural materials in order to explore the intern evolution of light industry.Considering we use a time-varying system to build model, so this paper estimate the weight by KaIman filtering technique and also we achieve a satisfactory effect. The layout of this paper as following:Preface, Model framework, Empirical analysis and some Conclusion suggestion.