A Correlational Research On The Balance Of Payments And Inflation

With the pace of China’s opening up forward, China’s current. account openness of international trade has reached a higher level, but our country is gradually opening up the capital account, but also means that the lower the degree of openness in the original closed economy conditions, the proposed macroeconomic theory and policy has been unable to fully explain and improve the current economic phenomenon, this article will study the international balance of payments and inflation as the main body, mainly from the perspective of the international balance of payments impact of inflation, respectively, from the regular account, capital and financial accounts and reserve accounts three specific path study its impact.This article first systematic analysis of all aspects of the Balance Of Payments affect inflation pipeline. Then, the article established multivariate vector auto regression model to empirical analysis of the various pathways by using1997-2013monthly data. The results showed that:the current account conduction path, the international commodity price fluctuations can significantly affect domestic prices; capital conduction path in the financial account, the increase in foreign direct investment can increase GDP, and promote the development of the real estate market, thereby bringing prices levels rise, but the impact is small; reserve accounts conduction path, the foreign currency reserve assets of the changes did not significantly affect the changes in the monetary base thereby affecting the price level. Finally, according to the study conclusions, the article put forward some the corresponding policy recommendations to help improve China’s international balance of payments and inflation situation. The main innovations:First, in this study, considering the international commodity price transmission mechanism and to consider the impact of the central bank’s influence on the monetary transmission; Second, the proposed perfect balance of payments impact of inflation full path system, and on the path to make comparisons between different effects; Third, the data selected monthly data, clearer indicators reflect short-term fluctuations.