A Research Of China Inflation In Open Economy Base On N-country?region? State Space Model

A new cycle of inflation is coming,which means the government's macro policy is facing enormous challenges,including the imported inflation that cannot be neglected any longer.In studying the impact of external economic environment for China's inflation,there is only a research to study the dynamic of Hong Kong's inflation using three countries?regions? state space models but no one use in China's inflation.This article establishes a China-centric open economic environment N-country?region? inflation state space model,which is an application and expansion on the basis of previous frameworks.Under the framework of New Keynesian Phillips Curve(NKPC)framework,the article sets up China's inflation state space model,and joins the external influence factors including the United States,the European Union,Hong Kong,Japan and South Korea's output gap and inflation expectations,import prices and RMB exchange rate,and finally sets up a China-centric open economic environment N-country?region? inflation state space model.The empirical results indicate that since 2012 the influence of the composition of external influence began to have significant growth,began to replace "trend" components and become the main power of driving China's inflation rate.Inflation expectations(" trend " component)mainly influenced by one lag China inflation expectation,one lag United States inflation expectation,and the influence of the former contributed 54.18%,the latter contributed 45.82%.Change trend of yuan-dollar exchange rate has the opposite direction impact on China inflation expectations.Outer influence factors("cycle" component)mainly influenced by the change of one lag United States output gap and the change of one lag Hong Kong output gap,and the former impact is 2.9 times the latter.In this article,the model avoids the thought of " measuring the unobservable variables ",and identified American output gap and other international factors in China's inflation significantly.The innovation significance of establishing the N-country?region? inflation state space model is not only lies in the study of n-1 countries?regions?' influence on China's inflation,more is to create a scalable framework of research.When the world economy pattern changes in the future,this model will provide a good research foundation based on its flexibility and components of "trend" and "cycle".