The Research On The Influence Factors Of Chinese Inflation Expectation

Since the expectation has added into the research of economics,it become the most important status in macroeconomics,and it is the most critical research subject particularly among the measures of national economic adjustments leading and keeping market expectation stable.After the economic and financial crisis busted,all the countries were looking for the timely effective measures to surveil and predict variety of economic affairs in which the management of microeconomic groups' expectation has been a heavy mission.The Financial Condition Index(FCI),due to its simple configuration and it can timely change the financial variables in accordance with the development and innovations of economy and finance as well as the prediction capacity of the changes and trends on the future economy and finance,has been the intermediate indicator of monetary policy.The professional financial institutions from different countries thus constructed their own FCIs to satisfy their needs and purposes and they have been the effective management tools of monetary policy.This dissertation,based on the FCI,tests what factors and how extent of these factors influence inflation expectation.First,we estimate the Chinese inflation expectation from Retail Price Index(RPI)by using ARIMA model,then to construct a FCI,containing six financial variables including real short-term interest rate,real long-term interest rate,real effective exchange rate,real prices of real estate,real prices of stock and the increasing rate of monetary supply(M2),in accordance with IS-LM theory.After that this dissertation uses VAR impulse to calculate each weight of these six financial variables so as to ensure the Chinese FCI equation,then to find out the extent of these six factors that influence the Chinese inflation expectation and the durations from the expectation starts forming to the expectation finishes forming and then to the real inflation happens.Finally,to compare the Chinese FCI with the other FCIs from the developed countries and then to provide some suggestions.The results show that the Chinese inflation expectation belongs to adaptive expectation and the strongest impact on Chinese inflation expectation is real short-term interest rate and real long-term interest rate(both are 28%)followed by real effective exchange rate(24%),real prices of real estate(11%),real prices of stock(6%)and the increasing rate of monetary supply M2(3%).The expectation starts to form since one month after these financial variables have changed,and the expectation finishes forming after another three months,the following nine months are the period of real inflation influenced by the expectation.Therefore,the government need to manage the expectation within the four months since the financial variables have changed,and simultaneously to propel the market-oriented reforms of relative fields so as to improve the efficiency of expectation management of monetary policy.