Dynamic Characteristics Of China’s Inflation Inertia

Inflation is an important nominal variable used for analysis of monetary policy. And furthermore inflation is the central bank gradually build and improve the rate as one of the core elements of the transmission mechanism of monetary policy.As a consequence,deeply understand and grasp the dynamic characteristics of inflation has an important significance on the analysis of China’s monetary policy formulation and execution.For the central bank,sort out inflation inertia characteristics is the key problem in dynamic mechanism.Inflation inertia index as a measure of inflation is random shocks and deviating from the equilibrium level, and then return to the mean time, when the higher inflation inertia coefficient, suggests that the more obvious the hysteresis effect of monetary policy, monetary policy will not be able to obtain the desired effect.Because of the influence of the economic behavior or external shocks in the short term,there will be a do not conform to the central bank expected inflation, when the central bank in the governance of inflation to a thorough understanding of inflation after shocks to the hysteresis effect of monetary policy, so as to make appropriate monetary policy.World now signs of recovery, but there are still a lot of international environmental uncertainty and instability, global recovery is a slow and tortuous process, especially in excess capacity in our country, the economic structural adjustment phase, should be more careful use of monetary policy.In the process of achieving successful soft landing of the economy, we should also beware of the emergence of inflation.In order to avoid using a single inflation index on inflation inertia research respectively, this article selects the 1990 to 2015, the CPI and RPI sequence to describe inflation, using autoregressive model inertia coefficient of the CPI and RPI data rolling samples of generalized moment estimator to obtain dynamic fluctuation path of our country’s inflation inertia.After the inflation inertia wave path, transfer system by using Markov area estimation method to investigate inflation inertia transfer area and the dynamic characteristics of the system.The empirical analysis indicates that:(1) the scroll sample estimate to get inflation inertia volatility, found that China’s high inflation inertia, in most cases inflation inertia coefficient is above 0.8;(2) inflation inertia as inflation in China exist zone transfer, that is to say China’s inflation inertia wave path exists obvious area and low inflation inertia area high inflation inertia system;(3) the inertia of inflation in China under the condition of the double system has the characteristics of strong sustainability, both in the high inflation inertia system and in low inflation inertia area system, the duration of the inflation inertia is a year or so, the duration of the high inflation inertia for about two years.This paper argues that the central bank should be alert to the inflation pressure, acutely aware of the expectations of inflation, when inflation expectations, should according to the time of the inflation inertia is the implementation of monetary policy in advance.