Empirical Studies On The Threshold Effects Of Inflation On Economic Growth In China

This thesis mainly researches the threshold effect of inflation on economic growth in China. Researching the problems mentioned above not only complete the nonlinear empirical studies on the relationship between inflation and economic growth, but also helps to expand the discussion of implementation of inflation targeting in China. The results of the thesis provide important support value for China’s central to work out and implement monetary policy so as to realize the primary object of monetary policy.The thesis includes the following distinctive research work and conclusions.Firstly, treat the threshold level of inflation above which inflation will exert a negative impact on economic growth as research subject, it estimates the threshold level of inflation in China from 1978 to 2013 using a threshold regression model and method provided by Hansen. The main structure of the study includes four parts. The first part describes the background and significance of the research. The second part introduces the theoretical basis of the research on the threshold effects between inflation and economic growth. The third part estimates the threshold effects between inflation and economic growth in China. The result suggests that the optical threshold level of inflation on economic growth in China is 5%. When inflation below 5%, it will obviously exert positive impact on economic growth, otherwise, it will obviously exert negative impact on economic growth. The last part draws the conclusion of the study and make the research prospects. The thesis compares the impact that inflation will exert on economic growth both using linear regression model and threshold regression model, it shows that the relationship between inflation and economic growth is not invariable, but did exist a threshold effect.