The Formation And Determining Factors Of Households' Inflation Perception

People's Bank of china has been insisting on stabilizing the general price level and inflation expectations as the primary task of macroeconomic regulation since 2010.Especially the 2011 China's monetary policy report points out that the People's Bank of China will implement prudent monetary policy in accordance with the unified arrangements of the State Council and continue to stabilize the general price level as the primary task of macroeconomic regulation,adhere to the basic orientation of regulation,assess the current and expected results scientifically and correctly deal with the relationship among the maintenance of stable and rapid economic growth,the adjustment of economic structure and the management of inflation expectations.Therefore,the management of inflation expectations has a great effect on the transmission of monetary policy and the stability of macroeconomic development.Because people's inflation perceptions have a very big impact on the formation of inflation expectations,it is of great significance to study the formation and the determining factors of inflation perception.This paper mainly consists of the following three aspects:(1)First,this paper summarizes and concludes the foreign and domestic research results,then discuss the views of foreign scholars about the formation of inflation perception.Second,this paper create a new model to analyze the inflation perception formation of China's urban residents.After that ,this paper analyze and summarize the determining factors of inflation perceptions.(2)Calculating the inflation perception rate of urban residents since the first quarter of 2003 with two different mathods,then comparing and analyzing the results of two calculation mathods.After that,analyzing the inflation perception formation of urban residents empirically with the use of new model.The results show that not only are the inflation perceptions of urban residents related to changes in current prices,but also be influenced by ex-perceptions of themselves.(3)Analyzing the determining factors of inflation perceptions by survey.By the use of multiple regression model,this paper examines the effect of several independent variables to inflation perceptions.The results show that the purchase frequency of goods and real estate price have a significant effect on people's inflation perceptions.This paper has made the following two innovations based on the previous studies:(1) This paper measures the inflation perception of urban residents in China since 2003 in IPI model and finds that the time series data of inflation perception is consistent with the actual trend of CPI. On the other hand, the auther converts the prices qualitative satisfaction survey data collected by People's Bank of China to quantitative data with the net balance statistic method. By comparison of these two time series data, the author found that unexpected events outside the actual inflation lead to the gap between them. Without external factors, these two series data of inflation perception have a good degree of matching.(2) This paper combines the epidemiological model with IPI model to create a new model which is used as a framework to do empirical research about the inflation perception formation of urban residents.The results confirm the hypothesis proposed in this paper that people's inflation perceptions are determined both by the current price change information and the ex-perceptions.