The Empirical Study On The Influential Factors Of Chinese Price Fluctuation Under The Opening Economy Condition

Since the reform and opening up, China’s economy maintained sustained and rapid growth, at the same time, the price also appeared a few times larger fluctuations. China has undergone two higher inflation periods in the1980s and1990s.In the21st century, China’s overall price shows short-period fluctuation state.Price as one of important indicators of the macroeconomic situation, playing the dual role as "Macroeconomic indicator" and "market regulator".In the operation of the market economy, price fluctuation in a certain extent can adjust market supply and demand, optimize the allocation of resources, the fluctuation is normal and reasonable.However, the price fluctuations greatly will destroy the market equilibrium, even due to inflation and deflation,and then have a certain impact on the economic development and social stability.The ultimate goal of macro economy is to seek countermeasures to maintain the steady growth of national economy, it means that there is neither unemployment non inflation.Therefore, stable prices marked the basic balance of social total demand, it also have important significance for economic development and social stability.The price fluctuation is a common result of economic variables, short term factors such as demand change, economic expectations and market speculation, long term factors such as the economic structural adjustment, natural resources constraints and cost push. Under the condition of open economy, with the deepening of China’s opening to the outside world, external shocks also have a significant impact on the price level of our country, the effects of price fluctuation in China is becoming more and more complex.This paper selects six economic variables which affect the price level, they are commodity prices, exchange rate, interest rate, money supply, output gap and degree of dependence on foreign trade.In addition, selected the two price index to express the price level, which is the final price represented by consumer price index and the middle price represented by producer price index. Processed the data with the SVAR model for empirical analysis, established the model of final price growth rate and the middle price growth rate, the two models were obtained by the impulse response function and variance decomposition. Finally, analyzed and compared the economic indexes of impacts on the price, and found out the impact and transfer mechanism of the six economic variables on two kinds of prices.The conclusion of this paper is that the effect of international commodity prices on the final price is the most significant, while the influence of exchange rate on the middle price is the most significant. At the same time, the output gap, the interest rate and the foreign trade dependence degree also have the certain extent influence on the price of our country, effect of money supply on the price fluctuation is relatively weak. In the research on the impact of exchange rate, exchange rate is from the middle price transmission to the final price, the impact on the price decreases gradually, and has a certain time.From the research, we obtain some corresponding policy suggestions.First of all, under the condition of open economy, in order to avoid the impact of a serious impact on the international market, our country should strengthen our discourse right and pricing right to international commodity prices, and reduce the dependence on imported energy and raw materials through a variety of ways to ease from the price in the international market impact. Secondly, improve the ability to cope with the international transmission of shocks, enhance the flexibility of the exchange rate, further strengthen liquidity management, strengthen the monitoring and control of liquidity and supervision of cross-border capital. Finally, the effective control of the output gap, to prevent the output gap too large and effect the stability of the price level.