An Empirical Study On The Relationship Between Inflation Scissors And Industrial Enterprise Profits

The consumer price index(CPI),the producer price index(PPI)and the purchasing price index of raw material,fuel and power(PPIRM)respectively measure the purchasing prices of the consumer,the costs of final product manufactures and the costs of intermediate product manufactures.To a certain extent,the relative height and difference of these three kinds of price levels will influence the profit level of industrial enterprise.According to the data of recent years,it has formed a kind of inflationary scissors.For intermediate product manufactures,there is an inflation of the price scissors between PPIRM and PPI.For the final product manufactures,there is also an inflation of the price scissors between PPI and CPI.Based on traditional economics theory,the decline of PPIRM,the relative growth of PPI;the drop of PPI,the relative growth of CPI,they all mean that the profits of industrial enterprises will rise,but actually the profits of industrial enterprises above designated size have been maintained a negative growth.In recent years,the overall level of CPI and PPI in China has been rising,the interacted relationship between these two price indices and the profits of industrial enterprises has become a hot issue in academic research.At present,CPI and PPI forwards positive scissors,CPI is on the rise,PPI is on the decline,instead of rising,industrial enterprise profit growth rate falls sharply.In the existing literature,it is unable to explain the causes of current phenomenon.In the new economic environment,with different research perspective and methods,this article constructs the framework of DSGE model,aiming to structurally explain the relationship between CPI and PPI,the reasons of positive scissors,finding the impact of CPI and PPI scissors on the profits of industrial enterprises above designated size,deeper explaining the reasons of positive scissors,the industrial enterprises profits decline,helping central bank to implement monetary policy,to crack CPI and PPI scissors to further expanding,improve the economic environment of the industrial enterprises,providing countermeasures to prevent further deterioration of operating conditions of industrial enterprises,it has certain practical value and practical significance.This paper is divided into five parts:the first part is introduction,including research background,research significance,category of definition,the relevant literature review,the paper frame structure,research methods,the innovation and inadequate.The second part is theoretical analysis,the relationship between inflationary price scissors and the profits of industrial enterprises above designated size.Firstly,analyzing the traditional economic theory about the transmission mechanism of three price indexes.There are many kinds of mainstream research theories.Then summarizing some related research theory about the relationship between CPI,PPI and profits of industrial enterprises above designated size,and indirect analysis the relationship between the scissors and profits of industrial enterprises above designated size.The third part is descriptive statistical analysis about the relationship between inflationary price scissors and profits of industrial enterprises above designated size.First,processing data like CPI,PPI,profits of industrial enterprises,describing the changing trend of scissors and profits with the use of chart and other forms,then using co-integration test and granger causality test to prove that there is a relationship between them.The fourth part is an empirical analysis about the inflationary scissors and profits of industrial enterprises above designated size.This paper mainly uses previous Dynamic Stochastic General Equilibrium Model(DSGE)to describe the behaviors of family,manufacturer,and government.It aims to use dynamic optimal method to realize the optimization of the conditions of three departments,bases on the actual economic data to estimate the model parameters,simulates the operation of the economic system,and gets conclusion through the impulse response analysis.Fifth part is the policy recommendations included four aspects.Firstly,to improve the channels of price transmission mechanism,we should establish a reasonable price transmission mechanism.Secondly,we should accelerate the speed of market clearing to reduce the stock of industries.Thirdly,we should implement market-oriented pricing mechanism of the price of natural resources.At last,strengthening the innovation ability of enterprises,enhancing industrial products' ability of competition.