China's GDP growth and CPI: Relationship、Equilibrium and “The Twelfth Five-Year-plan”Target Control
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| Title | China's GDP growth and CPI: Relationship、Equilibrium and “The Twelfth Five-Year-plan”Target Control
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| Author | Zhou Wen and ZHAO Guoqing |
| Organization | Yunnan University of Finance, Kunming, Yunnan |
| Email | zhou59021@163.com,guoqingzh66@163.com |
| Key Words | China；Inflation；GDP Growth；Equilibrium；Optimal Control |
| Abstract | The dynamic relationship between Inflation and economic growth is the basis for the macro-control , However，there isn’t a clear and valid result about the complex relationship between inflation rate and GDP growth in linear and static framework. This paper builds the inflation and GDP growth’s nonlinear dynamic system model (GDP-CPINLDS) based on Mar. 1996 ~ Dec. 2009 GDP growth, CPI and M2 growth rate of quarterly data. The empirical results reveal that China’s optimal growth rate of GDP and CPI is 10.51% and 2.06%, and the GDP growth rate without inflation is 8.92%. As a whole，China's economic growth and inflation stay in sub-optimal and non-equilibrium operation state, both moves towards the same direction. Optimal control experiments showed that the only control M2 growth rate can not be fully realized target, GDP growth must focus in order to achieve “the twelfth five-year-plan”target and to minimize social loss. Therefore，we recommend that GDP growth should be oriented to control, and tight monetary policy is based, At the same time, established joint control of a strong mechanism with a variety of means of control, to ensure that the GDP growth and CPI target to achieve precise in “the twelfth five-year-plan” period . |
| Serial Number | WP116 |
| Time | 2011-10-27 |
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