The Wealth Redistribution Impact Of Inflation Between Urban And Rural Residents In China

Inflation is a complex macroeconomic phenomenon, being discussed by academics for a long time. Closely related to everyone’s life, inflation changes the relative price systems of various production factors and commodities, impacting on all aspects of real output, consumption, import and export etc. To study inflation deeply and to analysis the effect of inflation on the redistribution of wealth between urban and rural residents in China, not only can provides effective reference for the monetary policy development of the central bank, but also helps some people cope with the effects of inflation.This paper analysis the effect of inflation on the redistribution of wealth between urban and rural residents in China from a theoretical and empirical perspective, considering the characteristics of Chinese dual economic structure and the differences between urban and rural residents on property structure and consumption structure. For the definition of inflation, this paper adapts "the general phenomenon on the sustained increase of commodity and service price". The main contents of this paper are as follows:First, through a lot of literature, make the literature review on the definition of inflation、causes of inflation and the effect of inflation on the redistribution of wealth between urban and rural residents, and make related research summary, then to lead research subject of this paper; Second, with the combination of domestic and international research, construct an index of considering the property and consumption structures of Chinese residents, to measure the effect of inflation on the redistribution of wealth between urban and rural residents in China; Again, make empirical analysis of the effect of inflation on the redistribution of wealth between urban and rural residents in China through the use of panel threshold model, showing non-linear characteristics, in addition, considering the significant difference in east-central-west regions, this paper analyzes the differences of inflation redistributive effect from a regional perspective; Finally, summarize the main conclusions and make the following policy recommendations--controlling inflation, establishing the social welfare and security system, making the reform of dual economic system to achieve the dual economic structure transformation.This paper finds that:(1) Inflation shrinks the wealth of urban and rural residents in varying degrees, and the overall impact on rural residents is greater than that on urban residents. (2) There is a double threshold effect of inflation on the redistribution of wealth between urban and rural residents, and the wealth distribution effect of inflation diminishes in marginal efficiency for rural residents. (3) In the east, middle and west of China, the nonlinear wealth distribution impact of inflation has diminishing trend and they have differences in different regions.In summary, this paper carries out a detailed and comprehensive analysis on inflation, to hope this can provide some help for recognizing the impact of inflation in different urban and rural residents and provide some empirical evidence for the central bank to develop appropriate monetary policy.