The Empirical Research On The Relationship Between Agricultural Prices And CPI

Since 2007, agricultural product prices and CPI of our country had experienced two significant roller coaster rose fell, in 2014 China’s CPI rose to 2%,the lowest since 2009,agricultural prices also slowed, experts pointed out that in 2015 the price of agricultural products and CPI is likely to continue at the low, need to guard against deflation. Whether the overall price rise or downturn, it will be impact the residents daily consumption level and the improvement of living standards, will also have a serious impact on the sustainable development of national macro economy. In recent years, a lot of scholars at home and abroad has analyzed the relationship between the price of agricultural products and CPI, there are four main points:the first is the agricultural product price changes is an important cause of CPI changes; the second view is the agricultural product price changes has no effect on CPI change; the third view is the price of agricultural products and the CPI interaction. Agricultural products price change will cause CPI to rise or fall, in turn, the change in the CPI will also lead to change in prices of agricultural products; the fourth view is there has no necessary link between the price of agricultural products and CPI. Based on detailed analysis and summary the former research, try to avoid the defects of the existing research, I made an additional research of the relationship between the prices of agricultural products and CPI from the comparison of theoretical and empirical.The full paper is divided into five parts, the specific arrangements for the content of the study are as follows:Chapter one is Introduction. This part mainly introduces background, purpose and significance, the main research contents, the domestic and foreign research on this problem, the dynamic method and innovative points and shortcomings of the paper.The second chapter mainly analyzes the influence factors about the CPI and the price of agricultural products; this is the basis to analyze mutual relationship between price of agricultural products and CPI. There are many factors influencing the change of CPI:the first one is the relationship between supply and demand. Changes of total supply and total demand will result in the overall price level fluctuations, the supply and demand structure unreasonable will also have an impact on the price level, but the contradiction between supply and demand effects on the CPI are short-term than long-term; the second is the money supply, it will produce a long-lasting effect on CPI; the third is the exchange rate. With the rapid development of economic globalization and the managed floating exchange rate system implementation, the change in the exchange rate more flexible, price changes on the international market easily through the exchange rate influence domestic price; the fourth is the economic structure. Factors affecting the price of agricultural products are mainly:the value of product itself, adverse selection caused by asymmetric information, unregulated the circulation system, the national macro policy and sudden factors. In addition, this part also illustrates the negative effects of CPI and agricultural price volatility could lead to economic development and social life.Chapter three analyze the conduction mechanism of price of agricultural products and CPI interaction, which provides a theoretical basis for the empirical research on the relationship between the prices of agricultural products and CPI. Analysis that the price of agricultural products mainly through food CPI, the PPI, labor cost and producer consumer psychological expectations four ways to effect of CPI; while CPI may influence price of agricultural products through the supply, demand and exchange rate.The fourth chapter is empirical analysis. Firstly, discusses the variables determination and selection and processing of data. Then according to statistical analysis, describe whether CPI and price of agricultural products have a strong correlation and cooperative relations. On this basis, using quantitative analysis method, including the stability test, Grainger Granger causality test to study the mutual relations between them, then use the impulse response function and variance decomposition analysis of two movements affect the contribution of each other in-depth. Empirical results show that there is a long-term one-way positive relationship between price and CPI of agricultural products, agricultural products price changes is an important reason for the change of CPI, but the CPI fluctuations do not significantly impact on the prices of agricultural products.The fifth chapter, firstly analyses the reason why the empirical test results, then puts forward several targeted polices to realize the goal of the stability of prices and market economy healthy development.This paper combined China’s current economic development situation, using real data, into the intensive and systematic theory summary and the series of empirical testing, trying to find reasons of the overall price level move in dramatic upward and downward from view for agriculture and put forward policies which to support the development of agriculture and in turn maintain overall price stability, which is also the spirit of NPC and CPPCC and the central document No.1 coincide of consecutive years.