The Empirical Analysis On The Influence Of China's Foreign Exchange Reserves On Price Level

After the significant reorganization in the foreign exchange management system in our country in 1994,the foreign exchange reserves were rapidly increased in our country.It had greatly influenced on the domestic finance.Foreign exchange reserves are the important link between the domestic and foreign financial market.It is the result of the macroeconomic operation,and also the important means of macroeconomic control.In the domestic economic activities,price level is the important indicator of the domestic economic activities.The rapid increase on foreign exchange reserves and the movement of price level have become the two outstanding problems in our domestic finance,which domestic academics and policy department greatly concern on.Therefore,the text restricts the research scope in empirical analysis between China's foreign exchange reserves and the price level.At the present,the scholars in our country emphasize the study on moderation scale of the foreign exchange reserves,some of them systematically analyze the connection and impact between foreign exchange reserves and price index in our country,which were short of empirical analysis.Consequently,the text is about the influence of foreign exchange reserves on price index in our country,it mostly use the method to analyze the reciprocity between foreign exchange reserves and price index in our country from the short and long term point of view,which connect the norm and positive analysis,and also connect the qualitative and quantitative analysis.The text restricts the yearly statistics as the sample space from 1981 to 2007.In the end, on the base of the empirical analysis conclusion,the text will submit some policies and suggestions of remitting the price stress which caused by the increasing foreign exchange reserves.By way of document abstraction,the theoretical analysis and positive analysis, the text comes to the conclusions:From the theoretical analysis,by way of foreign exchange share in base money and money supply,increased foreign exchange reserves will cause the price level rising.From the positive analysis,in the long term, foreign exchange reserves and price level in our country exist a positive correlation. In the short term,as the result of the foreign exchange sterilized intervention policy, which is actively adopted by People's Bank of China,foreign exchange reserves could not influence the fluctuation of price level in our country.Increased foreign exchange reserves will not necessarily cause price level increasing in our country.