Inflation Based On The Nonlinear Star Model For China Dynamic Characteristics

Inflation is an important indicator of measuring macroeconomic operation, and the public pay close attention to the height of inflation. One of the problems of macroeconomic policy makers should be the main concern is the level of the inflation target set for how much and what kind of macroeconomic policies should be implemented to achieve this target. Therefore, prior to the development of our country we need to target inflation for deep research, objective and comprehensive understanding of the nonlinear dynamics of the inflation rate of inflation for the future direction of rational scientific prediction.It has important theoretical and practical significance for improving our country’s economic levels, and promoting social harmony and stability,Firstly, some of the basic theoretical knowledge of inflation are introduced, including the causes and treatment methods inflation definition, measurement, classification and inflation generated. Secondly, the smooth transfer of self-regression model and its detailed description of the modeling process, including data of the nonlinear unit root test, test model nonlinear estimation method, the transfer of selected variables and transfer function as well as the model for the empirical part of the specific analysis to provide adequate theoretical basis.Specifically, the article uses the ring has a whole stable of more than the Consumer Price Index (CPI) data, the sample interval 1990 to 2014, through the establishment of the rate of inflation for the smooth transfer of second-order lag transfer variables autoregression (LSTAR) model to adjust for inflation characteristics of nonlinear dynamic analysis, and the results obtained by the models to test and predict the in-sample and sample outside, to determine the nonlinear model and the linear model fits the data is good or bad; using the estimated results inflation in the region of the sample is divided into two zones deflation and inflation in the system, and these two areas were characteristic root system analysis to determine the size of the persistence of inflation.Empirical results found that the smooth transfer of nonlinear autoregression (LSTAR) model than the linear model can better describe the nonlinear dynamics of inflation, the transfer rate of inflation and deflation system between these two regions is relatively fast, the critical value of 0.215, and based on this threshold will be divided in the sample data into the history of our country inflation inflation and deflation of two phases. Meanwhile two area larger than the root system characteristics, explain their persistence and strong, and asymmetry. Standard deviation calculations made two areas showed a nonlinear system in two districts smooth transfer autoregression (LSTAR) under the model, the level of inflation, the higher the value, the greater the uncertainty. In the last part of the article we present in this article for the Institute concluded that some of the associated policy recommendations, such as:the modest RRR cut; the financial capital to lend more to the "three rural" and small and micro enterprises, thereby reducing the cost of financing these enterprises.