The Spillovers Across Provinces Of China:a Dynamic Analysis Using Spatial Econometrics

Since the reform and opening up, with the rapid development of China economy, the government accumulated a lot of macroeconomic management experience, on the one hand also encountered many macroeconomic management Chinese characteristic difficulties. Which inflation management has been the core problem of macroeconomic management.On the other hand, inflation is a very important issue in the macro economy, it related to a country’s economy can a harmonious and healthy development and the social stability, has an important impact on the real economy, but also the important reference index of macroeconomic regulation and control policy, which has an important impact on economic growth, employment, investment etc.. For a long time, the research about the inflation plays a very important role in macroeconomic theory and research. With the further deepening of reform, China macroeconomic management also began to face new challenges, in inflation governance need to find methods can adapt to the policy of economic environment of the new era.The stable price inflation is one of the main goals of macroeconomic policy of any country, especially inflation great influence to a country or regional monetary policy. With the development of economy, many countries in the world have adopted inflation targeting as a major part of the macro policy, visible inflation importance for policy making. How it came about? How inflation affects area? If China between provinces inflation exist mutual influence? How bad it? Whether controlling for these effects?The answers to these questions will affect the stability and development of the smooth growth of policy formulation, economy and society, so the research on Spillover Effect of inflation in the region between the new period has important theoretical and practical significance.Taking inflation spillover effect in Chinese inter provincial economic development as the research object, the new form and the existing academic achievements based on, through analyzing the existing literature, establish a new research frame, constructs a theoretical model in which a new analysis framework, this framework is defined from re starting the inflation, then analyze and guidance of the macro economy; looking for the appropriate proxy, by using the method of non structure (Global Vector Auto regressive, GVAR) to the theory of estimation, and to test the spillover effect Chinese inter. Finally, in the framework of the new macro economic analysis and put forward the corresponding policy recommendations.There are five parts in this article. The first part is the introduction, this part is mainly put forward the question, at the same time, based on the existing domestic and foreign literature summary, and then find out the whole problem theory and context, based on existing literature in preparation for the analysis of the next part. The second part inflation related basic theory and the theory of inflation framework. Through the definition and scope of the study combing the existing inflation, this paper will mainly related theories of inflation effects into the causes of inflation, inflation and inflation management three parts. This part mainly includes the cost push type, demand pull inflation;monetary theory; structural inflation input type inflation; inflation; the overflow. Through the analysis of existing theory, this part focuses on the re definition of inflation. Construction of the 3 sector economic model in the new assumptions, premise in money as the only subject of exchange, money as an asset from the angle of the re definition of inflation. The third part is the analysis of Chinese provincial inflation spillover mechanism. The establishment of new framework based on the analysis conducted on a part of the theory, through the analysis of the new framework of macroeconomic analysis, the transmission mechanism of inflation based on the new definition.The summary of the existing theory of inflation and establish a theoretical analysis framework of a third sector, in the theoretical analysis framework of redefine the inflation, with particular emphasis on major asset price increases the impact on inflation. On this basis, the 2004-monthly data of 30 provinces of China in 2013, by constructing joined the spatial attributes of the gvar model to analyze the influence between provinces spillover effect and monetary policy and asset price inflation in various provinces.The analysis shows that the spillover effect of inflation generally exist in China’s inter provincial. According to the estimation of the gvar model, we obtain the following three main conclusions:(1) China’s various provinces between spillover effect, but the size of this spillover effect is not the same.(2) monetary policy is not the same as in the transmission effect of different provinces of china.(3) the main asset price to real estate prices as the representative has an important impact on inflation. According to the above conclusions, this paper recommends the following:(1) should pay more attention to the local data statistics, in order to improve the ability to fight inflation.(2) to develop domestic trade, strengthen inter regional exchange of goods.(3) concerned about the price of the main assets, prevent the currency depreciated.