Empirical Research on the Relationship between Chinese Inflation Level and Macroeconomic Variables

摘要

Indicators of consumer price index (CPI), gross loans of financial institutions (GL), cash in circulation (MO), narrow money (Ml), money & quasi money (M2), foreign exchange reserves (FER), exchange rate (ER), nationwide interbank offered 120-day rate (R) and gross domestic product (GDP) are selected and virtual variable is introduced to measure the impact of financial crisis. The dynamic relationship between China's inflation level and relevant macroeconomic variables are empirically researched. Empirical results show that China's inflation inertia is relatively strong; Subprime mortgage crisis in United States has had a significant impact on Chinese inflation level and etc. Suggestions such as improving the transparency, credibility and independence of Chinese monetary policy, paying close attention to the international economic situation, and ensuring Chinese inflation level remain within reasonable limits are given.