Research On The Calculation Of China's Core Inflation Rate

Inflation is a common economic phenomenon,but in economic theory,inflation will affect the distribution of wealth and output and employment,so effective observation and measurement of inflation is particularly important.The common indexes of measuring inflation are:CPI,PPI,GDP Deflator and Wholesale Price Index.In China,CPI is usually regarded as an important measure,but macro-economic situation is often influenced by various factors,which makes the CPI can not accurately express real situation in China,and becomes an effective basis for the formulation of monetary policy.Western economists argue that economic policy should be based on core inflation.Inflation should focus on the long-term convergence that can be affected by monetary policy.At present,many countries use the core inflation index to assess the economic situation such as the United States,Britain,Canada.however,the National Bureau of Statistics has not officially released the core inflation indicators,and it's also the only one of the biggest economies in the world that doesn't disclose the core inflation rate,This is a drawback for our country to deal with the treacherous and changeable economic environment in the future.Core inflation is not a new concept.It is a measure of inflation,which is better than the original measurement indicators,such as CPI and PPI.But core inflation is not an alternative to the original measure,it is a complement.The measurement methods of core inflation include SVAR model method,the exclusion Measure,Censored Average Method,and weighted median method.This paper aims to introduce the core inflation theory systematically,and make a detailed introduction and comparative analysis of inflation theory and existing measures,core inflation definition,function,Advantage and measure method.Based on the expected nature and evaluation of the core inflation rate measurement method proposed by Wynne(1999),Vega and Wynne(2003),this paper considers that the method of using Censored Average Method and SVAR model method is more reasonable and reliable.Finally,the paper puts forward some suggestions on the application of core inflation and the selection of methods,as well as the timeliness and accuracy of the inflation index issued by the National statistical Department.The sample used in the current academic research is not up to date,so the research on core inflation is not of realistic significance.Generally,only one measure method is used to estimate core inflation,but any measure method has its drawbacks.Based on the previous academic viewpoints,this paper defines the core inflation,then constructs the econometric model to estimate it.In this paper,we use Censored Average Method and SVAR model method to estimate the core inflation rate.The innovation of this paper is as follows:The estimated value is calculated by SVAR and Censored Average Method,and then the final estimation value is obtained by weighting.(2)Innovative combination of the two models,combining the advantages of two methods and achieve complementary advantages.