The Research on the Impact of China’s Inflation Caused by Financial Asset Price’s Fluctuation
|School||Anhui University of Finance|
|Keywords||financial asset price inflation VAR model|
In recent years, with the financial markets continuing to develop and mature, the proportion of financial assets in residents asset is rising and the structure of the financial asset has a diversification development, the proportion of bank deposits tends to decrease, and other financial assets proportion of investment tends to increase. Enhancing the proportion of financial assets and diversifying the structure makes that fluctuations in the prices of financial assets have increasing impact on the living of residents and macroeconomic. Meanwhile, the real economy will continue to be plagued by inflation, in this context, to study how fluctuations in the prices of financial assets affect inflation, is a very practical and significant proposition.On the basis of extensive literature, this paper firstly elaborates the causes of financial asset price fluctuation and related theory of inflation and then summarizes the financial assets price inflation conduction mechanism. Then, the paper undertakes a historical description of the financial asset price indexes and inflation index from the2002October to2012April. The empirical part of the paper firstly has a test of the data stability which is the premise condition of establishment of VAR model. Then the paper analysis the financial asset prices affect inflation by impulse response and variance decomposition Empirical test shows gold, equities, foreign exchange, interest rate changes have an impact on inflation, the impact of interest rate is the most significant. Secondly the relationship between REER and inflation has instability, the other is direct ratio. They occasionally appear reverse change. Gold price, stock price, interest rate and inflation have a positive relationship. Thirdly, the effect of four financial asset prices weaken stage by stage.According to the empirical analysis, the paper finally offers relevant policy proposals to prevent inflation by adjusting financial asset price:monetary policy should consider the changes in the prices of financial assets; strengthen the mediation of the long and short interest rates to promote market-oriented interest rate reform; curb excessive speculation and reduce the false ingredients in the capital market; flexible use of exchange rate tool to stabilize RMB expected appreciation; improve the gold trading market and focus on risk prevention.