An Empirical Analysis Of The Effect Of Bulk Commodities’ Price On The Price Level In China

Bulk commodities mostly are strategic production materials and life supplies, which is an important part of a country’s macroeconomic development. In the process of city modernization and industrialization in China, the participation of bulk commodities market is deepening. And as the upstream of production and consumption products, the market can reflects the trends of the whole macro economy to a certain extent. Therefore, to study the relationship between the bulk commodities price fluctuations and China’s macroeconomic trends has important practical significance. The study gives us an objective understanding of bulk commodities market’s position in our country economy development and how to further develop and improve the commodity market.Based on summarizing the research of domestic and foreign scholars about the relationship between the bulk commodities market and macro economy.The paper through two paths to analysis how the bulk commodities’price impact the China’s consumer price, they are the path of the product prices and currency impact. Bulk commodities market directly and as inputs after value increment involve in the final product market exchange to influence macroeconomic in terms of production and value chain path; Through the commodity price fluctuations affect the monetary policy eventually affecting consumer price level in China in terms of currency path.The empirical research about January2011to October2014data, using VAR Model, Johansen Cointegration Test, Granger Causality Test, Impulse Response Function, Variance Decomposition Model, shows that the bulk commodities index has a positive influence on China’s consumer price index, and leading China’s consumer price index. Both market overall consumer price level and the different classes of industry in the consumer price level affected by fluctuations in the price of commodities, and the consumer price level response to fluctuations in the price of commodities spoilers obvious hysteresis,the bulk commodities index can be used as a leading indicator of our country’s macroeconomic.Finally, the paper put forward targeted and feasible policy suggestion to improve and develop commodity markets, to stabilize and develop in our country’s macroeconomic at the overall level and the present condition of conduction path level.In this paper, I try to combine theory with practice. The analysis model and the use of the typical data sample committed to apply to the current economic environment, in order to get reliable conclusions.