| Inflation is a common macroeconomic phenomenon. There is, likewise, a long line of literature addressing it. The measurement of future inflation trends is an integral policy indicator for economists and central banks. The cyclical behaviors of price indexes reveal the underlying dynamics of economic environments. In this article, we compare three different methods for the prediction of inflation trends.Ever since the opening, China has gone through several times serious inflation, and then following those, China indulged in deflation for many years. So did the macroeconomic regulatory which has also undergone.several stages from restraining inflation to remitting deflation, and from regulating internal equilibrium to giving consideration to both internal and external balances. According to the circles of macroeconomic regulatory, there are about four stages in our country's history of inflation which are:1984-1992 is the climax of inflation after economic system reformation turned to cities; 1993-1997 when there arise some effects in managing inflation; 1998-2002 from inflation to deflation, the period for managing deflation; from 2003 onwards a new circle of inflation began.With the propelling of China's opening policy, China began to transform from budget-economic system to market-economic system. The inflation phenomenon in macroeconomics occurred frequently, from the mid-1980s'onwards, there was serious inflation phenomenon which began to occur in our country. Between 1984 and t 1996, the retail product price index rise by 2.6 times with the average of which rise by 8.2%, among those, there were two inflation climaxes the acceleration rates of which were 18.8%(1988) and 24.1%(1994) respectively. These have created great impact to our economy, policy, society as well as the process of the opening, and prevented the developing of our economy. The consumer price index has changed positive from negative since the end of 2002, from then on until to June in 2005, it has been increasing for 30 months. According to relative reports, despite of the globe economic crisis exploding in 2008, the price index did not decline as a result of it, the price index in the former part of this year did not look optimistic yet. So, it is rather important for prevent inflation effectively to analyse and research the causes and process of inflation and the trends of inflation pressure.Our research is based on a large range of materials of both in and abroad we have read on macroeconomics, the regulatory of monetary policy and pressure of inflation and so on. We also read cutting-edge research results and made a conclusion on which relating with our research. This is the basis of our research; restrict theoretic analysis and model inference. We have structured a macroeconomic model which was attached with restrict mathematic inference as well as logic prove that conferred to the reality of Chinese economy. We integrated theory and practice. Our research not only just care about abstract calculation and reference but we reflect about the effect of our country's monetary policy and try to make our own reply to some hot disputed issues.They are 1) the money circulation velocity method,2) the P-star method, and 3) the inflation pressure method. We then present a new-Keynesian macroeconomic model. Future, we also apply the inflation pressure method in constructing indices of inflation pressure. With these indices, we find that 1) the inflation pressure in the Chinese economy has gone through three different stages over the past eighteen years.2) China's inflation pressure has been negative for the years since 1998. In fact, for almost the entire time after 2003, inflation pressure has remained negative.3) Finally, we can tentatively conclude that China's inflation from 2003 onwards has not been endogenously determined, and that a large part of the inflation has been transferred from abroad. |
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